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Latest Articles on Amazon PE ratio:
One has heard the famous quote by Jeff Bezos:
"Percentage margins are not one of the things we are seeking to optimize. It’s the absolute dollar free cash flow per share that you want to maximize, and if you can do that by lowering margins, we would do that. So if you could take the free cash flow, that’s something that investors can spend. Investors can’t spend percentage margins."
Along with the high PE ratio enjoyed by Amazon, here we take a look at Amazon's cash flow. Amazon's cash flow remained positive for most of last decade. However, the factors contributing to this cash flow are changing with Amazon losing out on many of its advantages. Read on to see what these factors are and how this could lead to a real cash flow problem for the e-commerce company.
People who love Amazon usually argue that the company's thin profit margins are due to heavy reinvestments into R&D. If Amazon did not reinvest so much into R&D, Amazon PE ratio would be around 27. We have done a through stock analysis of Amazon to see why Amazon enjoys such a high PE ratio. Read on to see if this PE ratio is justified or not!
High PE stocks are typically considered growth stocks. Typically such high price earnings ratio is enjoyed by tech stocks. We take the example of Amazon's high PE ratio to see when such a valuation (if ever) is considered fair and actually means significant growth can be expected from the company.