24/7 Wall St. Insights

• Walmart Inc. (NYSE: WMT) stock has handily outperformed the stocks of its two primary rivals this year.
• Wall Street thought its most recent quarterly results were phenomenal.
• Also: Dividend legends to hold forever.

Walmart Inc. (NYSE: WMT) stock has handily outperformed the stocks of its two primary rivals this year. Shares of the largest company in America are up 50%, while those of Costco Wholesale Corp. (NASDAQ: COST) and Amazon.com Inc. (NASDAQ: AMZN) are up 37% and 26%, respectively.

By another measure, the three retailers look quite different. Amazon’s market cap is $2 trillion, Walmart’s is $636 billion, and Costco’s is $402 billion.

Amazon is not a pure play in retail. Its AWS unit is valued based on its cloud and AI technology. Some analysts say that AWS is worth more than the larger e-commerce unit. In the most recent quarter, it had $27 billion in revenue, compared to Amazon’s total of $148 billion. However, its operating income was $9 billion of the $15 billion Amazon total. Without AWS, there is an argument that Amazon’s market cap would be similar to that of Walmart and Costco.

In Costco’s most recent quarter, revenue rose from $53.6 billion to $58.5 billion, Per-share earnings went from $2.79 to $3.94, and comparable store sales were up 6.6%. Costco has 878 locations, almost all in the United States, Puerto Rico, and Canada. Costco has no opportunity to take advantage of growth overseas.

Wall Street thought Walmart’s most recent quarterly results were phenomenal, given its size. Revenue rose slightly less than 5% to $169 billion, and adjusted earnings rose from $0.61 to $0.67 a share. A key to the company’s success was e-commerce sales, which rose 21%. Much of the driver of this was that people could order online and pick up at physical locations. Walmart also has a successful international operation and Sam’s Club, which caters to businesses.

On paper, there is no apparent reason for the difference in stock price increases among the three. However, Amazon is now as much a tech company as a retail one, which means it competes with Microsoft and Alphabet. Costco is much smaller than Walmart, and it has no opportunities overseas.

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