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Comparison Of Wal-Mart And Amazon Stock

1105 Words5 Pages

Other financial information that would be important to the client in his decision making process would be: historical price of the stock, the current price of the stock, the stock’s historical growth rate, as well as the standard deviation. By analyzing the historical value of a stock, you can compare the stock’s current value to its historical value to see if the stock is currently above/below where it historically has been. Both the Wal-Mart and Amazon stock is currently priced above its respected historical average. This can mean one of two things, either: the stock is currently overvalued and will be falling back to the historical average in the future or the company is expanding/growing and this growth is resulting in the company being …show more content…

As outlined by Investopedia, “standard deviation for a stock is the dispersion of a set of data from its mean”. This means, standard deviation will tell you how widely a set of data (stock prices) varies within a particular time frame. A large standard deviation means a wide dispersion and therefore means a more volatile stock. Conversely, a small standard deviation means a small dispersion and therefore a very stable stock. Analyzing the stocks above, Wal-Mart has a standard deviation of 7.01 which is low and shows stability within the stock. Conversely, the Amazon stock has a standard deviation of 214.35 which shows volatility within the stock and hence the higher growth rate. Along with the financial information already reviewed above, there are many other ratios that can be analyzed in order to make a more informed decision on which stock to choose. Some of these ratios are: current ratio, asset ratio, net profit ratio, quick ratio, earning per share ratio, and price earnings ratio. Each of these ratios will help to provide insight into the organization and help the potential investor make a more informed decision on whether or not to invest in the …show more content…

The formula for net profit ratio is net income divided by net sales. The higher the net profit ratio the better the organization is doing to turn sales into profitability. The net profit ratio for Wal-Mart is .58 and Amazon’s net profit ratio is .30. This means that Wal-Mart’s ability to make a profit from each sale is greater than Amazon’s. What is surprising is how Wal-Mart’s net profit ratio is twice as much as Amazon’s, which technically means they are twice as profitable on a per sale

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