From Nasdaq: 2024-07-11 12:21:46

Amazon (NASDAQ: AMZN) is viewed as a better investment option compared to Target (NYSE: TGT) due to its higher revenue growth, profitability, and financial position. AMZN stock trades at a multiple of 4x sales, while TGT trades at nearly 1x revenues. The analysis suggests that AMZN will likely outperform TGT in the next three years.

AMZN stock has shown a 20% increase from early January 2021 to around $199, while TGT stock has declined by 15% to around $148. AMZN has seen better revenue growth, rising from $386.1 billion in 2020 to $574.8 billion in 2023, compared to TGT’s growth from $93.6 billion to $107.4 billion.

Amazon has a significant share of the online retail market in the U.S., which contributes to its solid revenue growth. TGT has also seen revenue growth due to e-commerce and omnichannel strategies. Still, there has been a shift in consumer sentiment impacting TGT’s sales. AMZN’s cloud computing segment and advertising business are additional growth drivers for the company.

In terms of profitability, AMZN has a slightly better operating margin compared to TGT. Amazon has a stronger financial position with zero debt as a percentage of equity and higher cash reserves compared to TGT. Based on these factors, AMZN appears to be a more favorable investment choice than TGT.

Looking at the future prospects, analysts estimate a higher valuation for AMZN, reflecting a 7% upside potential. TGT’s valuation is estimated to have an 8% upside. Both companies are expected to trend higher, but AMZN is likely to outperform TGT over the next three years.

In terms of returns, AMZN has shown stronger performance compared to TGT and the S&P 500. The high-quality portfolio by Trefis has also outperformed the S&P 500 consistently. Investors may find AMZN to be a more promising choice for investment considering its growth potential and financial strong position.



Read more at Nasdaq: Is Amazon Stock A Better Retail Pick Over Target?