Few people realize that Walmart (NYSE:) hit an all-time high before e-commerce giant Amazon (NASDAQ:) hit an all-time high.
The recent 3-for-1 stock split likely helped Walmart surpass its all-time high of $56, breaking the all-time high set in November of last year, and tonight's stock price It is trading around $59.
Amazon hit a near-perfect double top of $188 in July and November 2021, but has yet to recover from that level in 27 months. It's getting closer, but it's not there yet.
Few people realized that Jeff Bezos' CEO resignation happened just around the time of the July 2021 earnings report, causing Jeff to push his stock to a “high” with his resignation.
Quick summary of Walmart and Amazon earnings reports
In the Walmart earnings preview, this blog mentioned that WMT is talking about margins, but FY4Q24 is not about operating margins, GM's 23.97%, up 122 bp YoY. And it wasn't about operating profit margin. That's what AI and supply chain enhancements offer. To be honest, I was right for the wrong reasons, but the margin story is just beginning.
Gross profit was supported by advertising, and conference call notes noted that advertising increased 28% year-over-year to $3.8 billion, and while it remains a small portion of overall revenue, it is steadily increasing Walmart's profits. It was done.
Here are key comments from the conference call on food inflation (via TheTranscript):
Transcript of comments on Walmart's deflation
Here's what we learned about Walmart's metrics:
WMT EPS Estimated Trend
Walmart management provided a very lukewarm profit outlook for FY25 (ending January 2025), but the past two weeks have shown little interest in raising EPS estimates for 2025, 2026, and 2027. did.
WMT earnings revision trends
However, it's worth noting that even after the “deflationary conditions” mentioned above in TheTranscript's notes, Walmart's revenue forecasts have steadily increased.
Analysts aren't afraid to raise their sales forecasts for Walmart over the next few years.
Conclusion:
Walmart is just coming out of an overstock problem in 2021 and 2022, and only in recent quarters have its balance sheet and cash flow metrics returned to normal. With long-term “mid-single-digit” revenue growth and “high-single-digit” operating profit and EPS growth, Walmart can continue to capture market share in the grocery market – 20241 Grocery posted mid-single-digit growth year-over-year in the March quarter – Walmart will need margins to fuel further growth.
Amazon: Great quarter, stock still below all-time highs
Amazon had good growth in Q4 2023 compared to a tough quarter in Q4 2022, but for our readers, here are the bigger changes at Amazon over the longer term.
AMZN's historical revenue growth rate
From 2000 to 2021, Amazon saw year-over-year sales growth of more than 20% (with one exception). But its sales growth rate appears to have permanently slowed to half the pace of the past two decades.
This is manageable since Amazon also focuses on margins (like Walmart).
Advertising and AWS drove Amazon's fourth quarter of 2023, with the e-commerce giant's operating profit picking up significantly. Operating income was $13.2 billion, beating consensus of $10.4 billion (LSEG) and creating a 26% upside surprise.
Morningstar noted that Amazon's operating margin of 7.7% was the highest fourth quarter in a decade.
summary:
There was no talk of ratings in this post, but rather just a note to highlight Walmart's leadership compared to Amazon and Amazon's lag. Despite their Magnitude 7 status, we are in an era where Amazon, Alphabet (NASDAQ:), and Apple (NASDAQ:) have become mature companies and shifted their “growth” spots to other sectors, such as AI stocks. Is it included?
Another metric that I found interesting was that Amazon had revenue of $575 billion in the 23-year calendar, with accompanying operating cash flow of $85 billion for the same period. Walmart generated his $648 billion in his fiscal year, and along with this his operating cash flow for the same twelve months was his $36 billion.
Amazon still has a more efficient asset base, but Walmart is closing the gap in e-commerce.
This is not advice or recommendation. Past performance does not guarantee or indicate future results. Investments can result in loss of principal, even over a short period of time. Readers should determine their own comfort with portfolio and individual stock volatility and adjust accordingly.
thank you for reading.
