Originally Posted by Arlor
Yeah, profits are widely misunderstood around here. Amazon is "profitless" because it SPENDS all the money that would otherwise BE PROFITS on warehouse expansion, market share, publicity stunts, maybe FedEx if you believe the rumors, etc. Apple has lots of profits, but unless Apple's managers say either (a) we found some specific great ideas to invest in or (b) we're giving the money back to shareholders, investors are not wrong to wonder where the growth will come from. I think Apple's secrecy (which is very deeply ingrained) works against it on the stock market.
this is classic Wall Street hype. "someday!" but Amazon is a discount retailer, all the other stuff is a sideline. maybe someday it will equal or surpass Walmart, which would make it #1 - wow, what a future! so let's check reality (all from Yahoo Finance):
Walmart total year revenue: $475 billion with profit margin of 3.6% = net income to Common $17 billion, market cap of $240B, P/E 14.3.
Amazon total year revenue: $70 billion with profit margin of 0.2%% = net income to Common $0.13 billion, market cap of $177B, P/E 1400.0!
so Walmart sales are 6.5X Amazon, and its profits are 140X Amazon - yeah, lots of room for "growth" there!!! - but its market cap is only 1.4X Amazon's amazingly high value. well of course, Walmart hasn't been a "growth" stock for many years, but we all know Amazon will rule the world "someday."
folks if you don't see the market scam going on here (the smart guys there know), you must believe in the famous Wall Street tooth fairy.
for comparison, Apple total year revenue: $171 billion with profit margin of 22% = net income to Common $37 billion, market cap of $495B, P/E 13.9.
being in the premium hardware business instead of discount retail, Apple generates 2.2X the profits of Walmart even tho Walmart revenues are 2.7X of Apple's. but the P/E of both is very close, which makes good sense for a solid "investment" - not growth - stock.
i hope all the speculators here posing as investors, and all the growth stock hypesters bewailing Apple's maturity as 'just another' massive and massively successful giant corporation sink all their life savings into Amazon tomorrow. i'm sure "someday" you will get in return exactly what you deserve! believe!!