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Alibaba vs Amazon: What valuation reveals about the titans of eCommerce

Sep 07, 2018

  • Alibaba continues to trade at a discount to Amazon.com with its NTM PE at 58% discount to that of Amazon.com’s (second graph below). 
  • The recent pick-up in profitability at Amazon.com explains the stickiness of this valuation gap, though its structurally higher return on equity for Amazon.com best explains why this gap exists in the first place: on a LTM basis, Amazon.com has a return on equity of 21.56% vs 16.77%. 
  • On a NTM earnings yield (NTM EBIT/Current EV) basis, Alibaba looks “cheaper” with NTM earnings yield of 3.4% vs. 1.4% for Amazon.com. 
  • On a NTM EV/Sales basis, Alibaba trades at a 1.64x premium to Amazon.com! 
  • Alibaba is rated ‘neutral’ in our China All-Cap Global Top Picks. 
  • Amazon.com is rated ‘Top Buy’ in our US Consumer Discretionary Global Top Picks and ‘attractive’ in our US Large-Cap Global Top Picks.   

 

Amazon (AMZN) vs. Alibaba (BABA): 4-Year NTM P/E


Source: Bloomberg