Amazon Stock Analysis, Valuation (NASDAQ:AMZN)

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$1495.56 $49.36 (3.19%) AMZN stock closing price Mar 23, 2018 (Closing)
Watch Robo Advisor Video of AMZN Stock Analysis
Updated on : Mar 23, 2018
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AMZN 1495.6 (0%)
S&P 500 2588.3 (0%)
Closing Price On: Mar 23, 2018
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Commerce
Sector :
5 Quarter Revenue
Revenue Growth
Compared to the industry
Long Term Growth
5 Year CAGR:
Operating Profit
Operating Margin:
Sector Average:
5 Quarter Net Profit
Net Margins
LTM Margin
Compared to the industry
Debt/Equity Ratio
Debt/Equity Ratio:
Compared to the industry
Cash Flow
Operating cash flow:
Net Income:
Recent Growth
Long Term Growth
Cash Flow
FCF Margin
Operating Margins
Net Margins
High Debt Burden
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
Industry PS :
Sector:   Retail-Wholesale.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
Return on Equity:
Free Cash Flow Margin:
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Amazon Stock Analysis

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Amazon’s revenue has constantly climbed higher as the company is putting all its efforts to expand its topline. This has led to the creation of massive infrastructure causing Amazon’s assets to increase to over $65 billion. Amazon’s stock analysis highlights the contradiction in the exponential growth of its topline and its non-existent bottom line. After over two decades of operations many investors had started questioning if the zero profit business model of the company will allow it to survive in this heavily contested arena in the future.

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Note: Amigobulls stock rating is our opinion based on the historical performance of the company's fundamentals. It is not indicative of the future performance of the stock., Inc. Stock Rating 2.5/5

Should you buy AMZN stock?

  • Amazon's revenue growth came in at 38.2% in 2017 Q4.
  • Long term revenue growth has been strong with a 5 year compounded annual growth of 23.8%.
  • The operating cash flow looks good at 6.7 times the net income.
  • Amazon has an attractive ROIC (Return on Invested Capital) of 11.1%
  • The company has a healthy free cash flow margin of 15.4%.

Should you sell AMZN stock?

  • Amazon had a poor average operating margin of 2.3% over the last 4 quarters.
  • Amazon posted a TTM Net margin of 1.7%.
  • With a debt/equity ratio of  0.89, Amazon is highly leveraged in comparison to Retail-Wholesale peers.
  • Trading at a PE ratio of 328, AMZN stock is overvalued in comparison to industry average multiple of 19.6.
  • AMZN stock is trading at a PS multiple of 4.1, which is a negative when compared to the Internet Commerce industry average multiple of 0.7.

Comments on this video and Amazon stock

Amazon’s price trend has reflected this debate which led to a massive fall of over 20% in the stock’s value in 2014. However, the stock has recovered as the Amazon Web Services has helped Amazon to establish a stable bottom line. Amazon stock price history shows that the stock has performed much better than its competitors since the financial recession. The company has crossed an annual revenue run rate of over $100 billion. Even at that scale the company continues to show a growth of over 20%. Amazon’s financial analysis also shows a lot of room for cost cutting, which should help the company to boost its profits.

Amazon PE ratio chart shows a high valuation. However, Given the strong growth in Amazon topline and the recent bottom line strength, Amazon stock should be able to outgrow its valuations. The overall revenue growth and market share are more important for investors. Amazon Web Service (AWS) is the market leader in its category albeit facing huge competitive pressure. Its e-commerce business is also more diversified with stronger infrastructure than other competitors. However, the future of the company will be based on how well it is able to withstand the competitive pressures on all flanks and the overall cost efficiency of its business model.