Thursday, March 31, 2022

In February we told you the tale of Amazon’s two main segments, where we looked at the Amazon (AMZN) retail segment (national and international) and AWS. In this piece we want to see how those two segments compare to similar businesses. We compare Amazon’s retail segments to Walmart (WMT) and AWS to Microsoft’s (MSFT) Intelligent Cloud.

Let’s start with the retail side. As we compare Amazon to Walmart, remember that Amazon FYE is Dec. 31, 2021, while Walmart FYE is Jan. 31, 2022. Walmart’s Sam’s Club segment is included in Walmart’s U.S. operations, and all amounts are in millions.

As you can see from the above table, Walmart’s operating profit margin is much higher than Amazon’s; so is Walmart’s return on operating assets (ROOA). Even Walmart’s asset turnover is higher for U.S. operations, and slightly lower for international operations.

We had seen before in our previous analysis that Amazon’s retail segments do not perform as well as AWS. Let’s see now how AWS stacks up to Microsoft’s Intelligent Cloud (IC).

As we compare Amazon to Microsoft, again remember that Amazon’s FYE is Dec. 31, 2021 while Microsoft’s FYE is June 30, 2021 (and again, all amounts in millions). Also, Microsoft does not allocate assets to segments for reporting purposes so ROOA and Asset Turnover cannot be calculated for Intelligent Cloud.

As you can see in the chart above, again Amazon does not compare favorably to Microsoft. Although AWS’s revenue is somewhat higher than Intelligent Cloud, Intelligent Cloud’s operating income is much higher.

This analysis was conducted using the companies’ segment disclosures. Want more? See our attached spreadsheet or go to Calcbench Disclosures Query and find more companies of interest.  

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