A stock evaluation provides the requirement that enables better decision making in the market on the counters to buy, sell or hold based on the investment objective of the investor. Trade data available on the stock is important in evaluating a counter to ensure it is better suited to meet the objectives of the investor. In this analysis, and evaluation of Amazon and Walmart is conducted to provide the basis of the selection of one of the two stocks for long-term investment.
The first stock investigated is Amazon trading on the NASDAQ using the symbol AMZN. The company is currently trading at USD1,911.00, with a previous trading price of $1,902.888. The day's range of Amazon is 1,892.49 to 1,913.89, with a 52 week range of 1,566.76 to 2,035.80. The volumes traded by Amazon, on average, are 3,017,711. Amazon also has a market capitalization of 959 billion USD with a monthly beta of 1.51, which signifies to the possible risk associated with the company considering the beta is above 1. With a PE ratio of 84.68, Amazon presents a good investment asset with an EPS of 22.57 (Amazon.com, Inc. (AMZN), 2020, January 7). The two measures of PE and EPS present a company that has continued potential in growth and returns for the investor. However, the company does not provide dividends with no forward dividend and yield hence the only source of revenue for the investor is the appreciation in prices or buying at a low price and selling at a higher price. Considering the performance highlighted above, Amazon is predicted to continue on the rise with the EPS increasing to provide the investors with better returns. The competitive ability of Amazon and the market in which it operates provides increased prospects to the investor and hence presenting it as an attractive option.
The second option considered for investment was Walmart Inc. (WMT) a company trading on the NYSE. The current trading price of WMT is USD116.58 compared to the company's previous closing price of 117.65. WMT has a day's range of 116.20 to 117.51 compared to its 52-week range of 93.11 to 125.38. Important to note also, the market capitalization of WMT is 331 billion USD with a beta of 0.37 which is below the market beta of 1. The beta of the company indicates that the level of risk exposure of the investor is lower with a change in the market price not significantly affecting the price of the stock. The PE ratio of WMT is 23.32 with an EPS of 5.00. Despite the low EPS, the company provided dividends with a 2.12 per share and a dividend yield of 1.78% (Walmart Inc. (WMT), 2020, January 7). The ability of the company to offer dividends increases its attraction to investors as this provides an additional source of income or value. In terms of volumes traded, an average volume of 4,929,398 were traded within the last period which signifies to vast volumes traded. Th ability of WMT to improve its competitive ability can contribute to a significant increase in price of this stock also providing a viable option considerable when seeking an investment option.
Considering the options provided and the information presented on the company, both companies are good for a buy if the investor seeks a long-term investment of above a month. However, AZN provides a better investment option considering the market statistics obtained. A comparison between the two companies reveals that AZN has a higher market capitalization indicating a better market command compared to WMT. The market capitalization provides an ideal element in assessing the efficiency of the market based on the Efficient Market Hypothesis (EMH) (Panagiotidis, 2005). Comparing the EPS also reveals that AZN is a better company for investment compared to WMT with investors poised to obtain an EPS of 22.57 compared to the 5.00 offered by WMT. However, the latter offers dividends which are absent on the former. The selling price of AZN is however, high and hence will require the investor to spend more compared to if they would invest in WMT. In addition to the above, the risk associated with AZN is higher compared to that of WMT considering the beta values. However, the high risk also signifies to possible better returns for the investor compared to that possible with WMT. Lastly, the operations of the two companies also distinguish them with AZN dealing in a diversified industry including cloud computing, artificial intelligence, e-commerce, digital distribution, consumer electronics and grocery stores. Walmart on the other hand focuses on the retail market with less dynamism compared to that of Amazon.
Considering the information reviewed above, Amazon provides a better investment option for the investor compared to Walmart. The company has better market potential with better growth in earnings for the investor in the form of EPS. Therefore, Amazon is an ideal investment despite the high price at which obtaining the share is hence the recommendation for the acquisition of the company shares and not Walmart.
Amazon.com, Inc. (AMZN). (2020, January 7). Retrieved from https://finance.yahoo.com/quote/AMZN?p=AMZN
Panagiotidis, T. (2005). Market capitalization and efficiency. Does it matter? Evidence from the Athens Stock Exchange. Applied Financial Economics, 15(10), 707-713. doi:10.1080/09603100500107883
Walmart Inc. (WMT). (2020, January 7). Retrieved from https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch
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