If world domination was part of Amazon’s mission statement it’s certainly doing a good job. Amazon which already sells everything power tools to beauty products, is now angling to get in on the grocery space.
The company’s US$13.7 billion offer for Whole Foods rapidly expands the online retailer’s transition into brick and mortar stores. But don’t expect the deal to bring a lot of profits to Amazon. It has a long record of spending everything it makes on funding growth, leaving zero for profits.
Whole Foods’ growth is slowing from intense competition in the grocery business but it did eke out US$433 million in profits last year. It’s likely Amazon will redirect that cash into more growth as it expands its reach in grocery.
Of course, Amazon investors will tell you the company is rethinking its approach to profits, making sure it books a little more than it used to over the past year and change. But on a trailing-12 month basis, eight Canadian companies have profits that eclipse Amazon, despite being a fraction of the size.
In Canadian dollar terms Amazon’s profit over the past four quarters comes in around $3.4 billion in Canadian dollar terms, or less than half of what the Royal Bank of Canada and TD both made over the same period. Amazon’s market value, let’s keep in mind is about half a trillion dollars, while RBC and TD combined are less than half that.
Canadian companies more profitable than Amazon
Here’s a look at the Canadian companies with the largest profit over the past 12 months:
|Net profit (trailing 12-months)|
|Royal Bank of Canada||$11.2 billion|
|Toronto Dominion Bank||$9.6 billion|
|Bank of Nova Scotia||$7.8 billion|
|Bank of Montreal||$5.3 billion|
|Canadian Imperial Bank of Commerce||$4.8 billion|
|Frontera Energy||$4.5 billion|
|Thomson Reuters||$4.2 billion|
|CN Rail||$3.7 billion|
Of course as a growth company you’re focused on Amazon’s potential and less on its bottom line—for now at least. But if you’re looking for a company that has already established itself and has a solid earnings base then any of the companies above are profit machines. And all but Frontera Energy pay healthy dividends, which allows investors to claim some of those profits for themselves.