Breaking News
0

Better Buy Amid Market Volatility: Amazon (AMZN) Vs. Walmart (WMT) Stock

By Zacks Investment ResearchAug 20, 2019 05:53AM ET
www.investing.com/analysis/better-buy-amid-market-volatility-amazon-amzn-vs-walmart-wmt-stock-200456912
Better Buy Amid Market Volatility: Amazon (AMZN) Vs. Walmart (WMT) Stock
By Zacks Investment Research   |  Aug 20, 2019 05:53AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Shares of Walmart (NYSE:WMT) have easily outpaced its e-commerce rival Amazon (NASDAQ:AMZN) over the past 12 months. Walmart also posted yet another round of solid quarterly financial results last week amid heightened global economic slowdown worries.

Walmart’s Pitch

Walmart posted stronger-than-projected earnings results last week, but they did mark a slight downturn from the year-ago period. Wall Street didn’t let WMT’s earnings spoil the parade because they knew EPS would take a small hit as the company ramps up its e-commerce business, delivery offerings, and more. This includes its 77% stake in one of India’s largest e-commerce sites, Flipkart, which it completed last August.

Flipkart could prove to be a long-term winner for Walmart as India expands its middle class. WMT has also boosted its business through a series of acquisitions that help it reach new customers. More than anything else though, the Bentonville, Arkansas-based firm has shown that its modern retail initiatives have paid off. The firm surpassed 1,100 grocery delivery locations and has more than 2,700 pickup locations, while its NextDay delivery service currently covers about 75% of the U.S. population.

All of this helped Walmart U.S. post 2.8% comps growth on top of the prior-year quarter’s 4.5% comps expansion, which company executives noted marked its strongest growth in this vital category on a two-year stack in over a decade. Meanwhile, Walmart U.S. e-commerce sales surged 37% on the back of strong online grocery sales. Walmart CEO Doug McMillon also noted that the firm is gaining market share as it deepens its competition against the likes of Kroger (NYSE:KR) , Target (NYSE:TGT) , and, of course, Amazon.

Amazon’s Pitch

Like Walmart, Amazon doesn’t need much of an introduction. The Seattle-based online retailer’s penetration of the overall market from electronics to every-day household items and groceries helped spark fear throughout the brick-and-mortar world. Its Prime service has amassed over 100 million subscribers, who also have access to a streaming video platform that Jeff Bezos hopes will compete alongside Netflix (NASDAQ:NFLX) and soon enough Disney (NYSE:DIS) and Apple (NASDAQ:AAPL) .

The company’s high-margin AWS cloud computing unit remains a leader in an industry that has transformed the way many people and companies interact with data and technology. AMZN has also expanded its logistics business and pharmaceutical offerings, and its digital advertising segment is now the third-largest in the U.S. behind only Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL) .

Investors should note that Amazon has posted its slowest revenue growth—all coming in below 20%—in years over the last three quarters. Nonetheless, Wall Street will likely adapt its expectations if this slower growth becomes the norm for AMZN, by looking for expansion in units such as third-party seller services.

Outlooks & Earnings Trends

Moving on, Walmart’s management called for its full-year U.S. comparable sales to come in at the upper end of a previously forecasted guidance of between 2.5% and 3% growth. Our Key Company Metrics estimates call for Walmart’s U.S. comps to climb 3.2% in the third quarter to surpass last quarter’s 2.8% expansion and come on top of the year-ago period’s 3.4%.

Overall, our Zacks Consensus Estimates call for WMT’s Q3 revenue to jump 3.3% to $128.99 billion, with full-year fiscal 2020 revenue projected to pop 2.4%. Peaking ahead to the following year, WMT’s fiscal 2021, the company’s revenue is expected to climb 2.9% above our current year estimate to hit $541.82 billion.

Analysts have upped their earnings estimates in a big way since the company reported last week to help WMT’s bottom-line look much stronger. Walmart’s adjusted Q3 earnings are now expected to come in flat from Q3 2019, while its Q4 EPS figure is expected to come in 2.8% higher. WMT’s current fiscal year earnings are now also expected to come in flat from 2019, with 2021’s figure projected to come in over 4% higher than the current year.

Amazon’s Q3 revenue is expected to pop 21%, with full-year 2019 sales projected to climb 19.3% to reach $277.88 billion. Fiscal 2020’s sales are then set to jump over 18.1% above 2019. But, as we touched on earlier, this would mark a slowdown compared to Amazon’s roughly 30% top-line growth in 2016, 2017, and 2018, but come in near 2015 and 2014’s approximately 20% expansion.

At the bottom end of the income statement, AMZN’s full-year 2019 earnings are projected to climb 21.8%, with 2020 expected to surge 37% higher than the current year. In contrast to WMT, Amazon’s earnings revision activity has trended heavily in the wrong direction recently.

The Winner

It’s hard to pick a winner here, but we will nonetheless. Amazon is currently a Zacks Rank #3 (Hold) that is a diverse technology and retail firm that is poised to expand into new areas for years to come. AMZN stock also sits over 10% below its 52-week highs, which could give it some room to run in the second half of 2019.

Meanwhile, Walmart is a Zacks Rank #2 (Buy) that pays an annualized dividend of $2.12 per share, for a solid 1.9% yield at the moment. This could make WMT stock look even more attractive as the yield on 10-year U.S. Treasury notes rest at roughly 1.55%.

Walmart shares do sit near their 12-months highs, but WMT’s outlook, expansion plans, dividend, and valuation help give it the slight edge against AMZN.

Legalizing THIS Could Be Even Bigger than Marijuana

Americans spend an estimated $150 billion in this industry every year… more than twice as much as they
spend on marijuana.

Now that 8 states have fully-legalized it (with several more states following close behind), Zacks has identified 5 stocks that could soar in response to the powerful demand. One industry insider described the future as “mind-blowing” – and early investors can still get in ahead of the surge.

See these 5 “sin stocks” now >>



The Walt Disney Company (DIS): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Netflix, Inc. (NFLX): Free Stock Analysis Report

Facebook, Inc. (FB): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Walmart Inc. (WMT): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

The Kroger Co. (KR): Free Stock Analysis Report

Original post

Zacks Investment Research
Better Buy Amid Market Volatility: Amazon (AMZN) Vs. Walmart (WMT) Stock
 
Better Buy Amid Market Volatility: Amazon (AMZN) Vs. Walmart (WMT) Stock

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email