Amazon Vs. Apple: Here's the Top Bet Among Tonight's Bombastic Earnings Reports

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Stocks Analysis by Brian Gilmartin covering: Apple Inc, Amazon.com Inc. Read Brian Gilmartin's latest article on Investing.com

Last quarter, Q2 ’24, the disappointment was in online stores and advertising revenue being a little light, as Amazon is in full “flywheel” mode, using their various business segments to drive additional revenue.

However, that’s just one metric; AMZN’s price-to-cash-flow is 16x and price-to-free-cash-flow is 39x. AMZN’s trailing-twelve-month cash-flow per share is $10.58 per share, while AMZN’s TTM EPS per share is $4.68. Despite it’s sizable growth, e-commerce still has a lot of market share to gain from the traditional retail sales dollar. It likely won’t be as rapid as it has in the past 25 years, but the fact is e-commerce still has plenty of room to grow. Per the same report from Bespoke is that traditional retail sales grew 1.5% y-o-y as of the mid-September ’24 retail sales report, while online sales grew 7%.).

It’s not unreasonable to expect that Amazon will see slower revenue growth, and slower EPS growth with gradually better margins from AWS, advertising and the other “flywheel” businesses. The point being that Apple’s fiscal Q1 ’25 seems to have rather conservative assumptions built into it coming into the Q4 ’24 earnings release.

For some reason too, Apple has slowed their dividend growth to a low-single-digit increase. A more interesting metric for a numbers geek is that over the last 7 quarters, Apple’s cash-flow-from-operations has averaged a -2% growth rate. What Apple did to accommodate that was to reduce “capex” from an average of $11 – $12 billion to roughly $8 billion per quarter.

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