Gilford Securities: Amazon Measures Performance By Cash Flow, Not Profits

Loading...
Loading...
Amazon.com, Inc.AMZN
has utilized innovative ways to battle against traditional retailers like
Wal-Mart Stores, Inc.WMT
to gain market share and become an industry leader. Amazon's growth and impact on the retailing space has certainly made its mark, at least according to Bernard Sosnick of Gilford Securities. "Amazon doesn't have return on investment (ROI) on its radar screen," Sosnick said in a note to clients on Tuesday. "It measures performance by cash flow, not profits. Hence retailers that still strive to maintain a high ROI will be blown away by competitive forces." Naturally, a high return on investment is desirable, but it is only obtainable under normal business conditions. According to Sosnick, the retail space is certainly not operating under normal conditions given Amazon's "disrupter" intentions. Wal-Mart has historically targeted a high return on investment but according to Sosnick the company has stopped placing the metric as a priority as sales growth is now more important. "We braced for a confrontation between Wal-Mart and Amazon and for other retailers to be wounded by the crossfire," Sosnick wrote. However, Wal-Mart has a $16 billion net income "cushion" to absorb the competitive nature of the coming holiday season. Sosnick adds that the retailing space will become a "death match" as weaker retailers will become the true victims.
Loading...
Loading...
Posted In: Analyst ColorAmazonBernarnd Sosnickgilford securitiesWal-Mart
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...