Walmart Inc (NYSE:WMT) remains the biggest retailer on the planet.
But it’s hard to tell sometimes with all the talk about its hard-charging rival, e-commerce giant Amazon.com (NASDAQ:AMZN).
When you compare the two firms’ stats, you would think that AMZN is eating WMT’s lunch and WMT is barely able to stay ahead.
AMZN has a market cap of nearly $1 trillion ($978 billion to be exact). It’s up 105% in the past 12 months, and 72% year to date. It sports a current P/E of 155. And it’s predicted that its revenue will equal or eclipse WMT’s U.S. revenue in the next 2 or 3 years.
As for WMT, its market cap is about $280 billion. It’s up about 23% in the past 12 months and is off 2.5% year to date. It has a current P/E of 55.
It’s hard to believe that the latter company is actually the bigger company that just reported spectacular Q2 earnings.
This is certainly a point of inflection for WMT stock. While everyone sings the praises of AMZN, and investors — especially the passively managed index funds — continue to buy it, it’s becoming wildly overvalued.
On the other hand, WMT continues to grow its revenues, its comp sales and expand its empire. But it’s not a FANG stock and it doesn’t have a cloud computing division, so it’s a bit harder to write a strong case for it in the press.
The fact is, it’s going to take another few years for AMZN to just get to WMT’s domestic revenue. WMT is making huge strides abroad in markets where AMZN will have much harder time accessing and will face significant competition from established e-commerce firms.
WMT’s $16 billion purchase of leading Indian e-commerce firm Flipkart is a prime example of the opportunities WMT is exploiting that AMZN will have a much tougher time getting a piece of. Had AMZN bought Flipkart, you can imagine the stories about AMZN in India and the rally the stock would have seen.
WMT does it and few raise an eyebrow, much less their stock rating.
Also bear in mind that WMT is a significant investor in Chinese e-commerce company JD.com (ADR) (NASDAQ: JD), a rival to Chinese e-commerce juggernaut Alibaba (NYSE:BABA).
And Microsoft Corporation (NASDAQ: MSFT) is a minority partner with WMT in the Flipkart deal.
These complexities are the reason why it’s more of challenge to tell the WMT story well. But the implications of all this are significant.
WMT’s relationship with MSFT and its recommendation to move its vendors off Amazon Web Services (AWS) and onto MSFT’s cloud (Azure) isn’t going to be a fatal blow for AMZN but it doesn’t help.
The power of a linked-up WMT and MSFT in the world of e-commerce may prove a real global challenge to AMZN. And their ability to sell in China and India where AMZN is stuck just looking in, will have big implications down the road.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
