Comparative Analysis

COMPARATIVE ANALYSIS 2

ComparativeAnalysis

ComparativeAnalysis

Inthis report, the companies selected for the comparative analysisinclude Ebay, Amazon and JD. The reason why these companies havebeen selected for this assignment is because they all belong in thesame industry of catalog and mail order houses. They companies arealso listed in the NationalAssociation of Securities Dealers Automated Quotations (NASDAQ)and they are the key competitors to each other. All the companies arealso very common for their operations in the United States. Theselected combination with facilitate effective comparative analysisby comparing the financial data of individual companies. The changesin the stock prices will be evaluated in assessing the riskiness ineach firm and also the likelihood for mergers and acquisition. Thus,since the firms belong to the same industry, analysis of theirhistorical stock prices can be easily compared.

Company’sBackground and Analysis

Amazonis a big organization in the book industry and even its market sharemay seem incomparable with other firms in the same industry. Theshare price and the earning per share for the company are alsopromising. The firm embraces utilization of modern technology andinnovation and uses of e-commerce and online selling of the productsand services.

Amazon,Ebay and JD are among the leading companies in this industry and themain aim of this report is to provide a comparative analysis of thecompanies in relation to their stock prices. From the analysis, thestock of Amazon has proved to trade at fair price with reference toits current valuation metrics and the expected revenue growth orvolume sales. However, Amazon seems to have exhausted its opportunityfor growth as its stock prices trend reveals that the Company isfinancially stagnant. The stock prices trend is as shown in thefigure below.

Fromthe graph above, there has been an up and down price fluctuation andthis reveals the limited opportunity for growth of the company.However, the volume calculation and the standard deviation shows thatAmazon is still holding a better position in the industry. This is asevidenced in the summary of the financial data provided below.

Volume Calculation

Max

36,806,500.00

Min

3,358,500.00

Average

9,852,456.75

Median

8,654,400.00

Standard Dev.

5,121,260.87

Contrary,the stock price of JD represents a high buying opportunity againstits growth and high margins. Therefore, JD Company can continue toanticipate healthy growth in the coming years. Also, the stock priceshave been continually increasing as evidenced by the graph presentedbelow with the analysis of the month of December year 2015.

Onthe other hand EBay being the closest competitor to Amazon has failedto utilize the most current technology and innovation. This has ledthe company in failing to maintain the customers and hence causing adecline in the expected revenue. The stock prices has also beendeclining in the last few months with anticipates a financialdistress for the company. The plot of the stock prices is also downsloping as shown in the graph below.

Theanalysis shows that EBay has been operating at low stock prices andtherefore, implies a high risk to the investors. Even though thevolume calculation shows the company as profitable organization, thetrend in its stock prices is still very poor.

Volume Calculation

Max

73,716,100.00

Min

2,517,300.00

Average

17,470,375.79

Median

14,964,150.00

Standard Dev.

10,383,727.23

References

Coombs,W. T. (2008). PSIhandbook of business security.Westport, Conn: Praeger Security International.

Yahoofinance. Retrieved from http://finance.yahoo.com/

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