BRAZIL - 2022/06/09: In this photo illustration, the Walgreens logo is displayed on a smartphone ... [+] screen and in the background. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
We believe Amazon stock (NASDAQ NDAQ : AMZN) is currently a better pick than Walgreens stock (NYSE: WBA), given its better prospects. Although Walgreens WBA is trading at a comparatively lower valuation of 0.3x trailing revenues than 2.5x for Amazon, this gap in the valuation is justified given Amazon’s superior revenue growth, profitability, and lower financial risk, as discussed below.
If we look at stock returns, AMZN, with a 29% fall this year, has fared better than a 36% decline for WBA stock, but both have underperformed the broader S&P 500 index, down 22%. There is more to the comparison, and in the sections below, we discuss why we believe AMZN stock will offer better returns than WBA stock in the next three years. We compare a slew of factors such as historical revenue growth, returns, and valuation multiple in an interactive dashboard analysis of Walgreens vs. Amazon: Which Stock Is A Better Bet? Parts of the analysis are summarized below.
1. Amazon’s Revenue Growth Is Better
Annual Growth Forecast - WBA vs. AMZN
2. Amazon Is More Profitable, And Comes With Lower Risk
3. The Net of It All
Stock Return Forecast - WBA vs. AMZN
While AMZN may outperform WBA, it is helpful to see how Walgreens’ Peers fares on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
Furthermore, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Target vs. Amerco.
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WBA & AMZN Return Compared With Trefis Multi-Strategy Portfolio
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