Walmart's Best Year

Walmart has lived in the shadow of Amazon for years. The e-commerce company grew much faster. In the next year or two, Amazon could take the crown as America’s largest public corporation by revenue. That is a position Walmart has held for years. However, Walmart has made a comeback, which is acknowledged by the movement in its stock price.

In the past year, Walmart’s share price has risen by 12% as Amazon’s has dropped by 11%. Based on its market cap, Amazon remains larger. Its market value is $1.5 trillion, while Walmart’s is $432 billion. However, analysts often say that half of Amazon’s market value should be assigned to Amazon Web Services, the largest cloud computing operation in the world.

Walmart’s success can be attributed, in part, to the fact that its own e-commerce business is successful. Its annual growth was 90% in the most recently reported year.

Analysts believe Walmart’s future is bright. Of the 35 analysts who cover the stock, 20 rate it at Buy and six rate it Overweight. Amazon’s analyst profile is similar.

Walmart has described the advantages of large physical stores. Many people prefer to shop in person. Others want to order online and pick up their orders curbside. Groceries, one of Walmart’s largest retail categories, are fresh from the store. Most foods cannot be delivered fresh via warehouses and trucks.

There is also the matter of Walmart’s footprint. It does business in China on a fairly large scale. Amazon essentially has been shuttered in China and only offers goods from outside the country.

Amazon has two disadvantages that may hurt its overall business. One is the push toward unionization by U.S. workers. The other is the possibility of regulation and questions from Congress. CNET recently reported the reason for a move toward regulation: “The argument comes from antitrust reformers who say Amazon has the lowest prices only because it bans sellers from posting lower prices on other websites.” These are not hurdles that Walmart faces.

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