Amazon Stock Analysis – Is AMZN a Good Stock?

This is gonna be one of those good stocks that I like but will probably not be able to buy because the price is always way above my valuation. The first time I got to know Amazon was during the dot com glory years in 1997. Back then I could not differentiate what is a good business model against the bad. In fact, I just looked at AMZN and felt that it was one of those companies who would just collapse like many of its peers then. Fast forward 20 years later… Amazon is now a profitable giant. Amazon has even overtaken Walmart as the biggest retailer in the world. Anyway, this is going to be an interesting analysis… Amazon Stock Analysis…enjoy!

As always, my goals with this Amazon Stock Analysis is to keep things simple and straightforward with no bias. Remember to leave a comment at the end of this analysis if you find it helpful…

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Amazon Stock Analysis – Business Snapshot

Amazon Stock Analysis Business Snapshot

Amazon Stock Analysis Business Snapshot

In my opinion, Amazon has an awesome business model. It allows other vendors to sell on its platform and they take a cut of everything that goes through them. Technically speaking, Walmart can also sell on their Amazon. This business model allows them to leverage and cut down on inventory. Awesome business model that has made them the largest retailer (by revenue) in the world with the lowest inventory in their warehouse – and that makes Amazon an efficient company.


Amazon Stock Analysis – Earnings Per Share

Amazon Stock Analysis - 10 Years EPS Track Record

Amazon Stock Analysis – 10 Years EPS Track Record

Although not a smooth and consistent growth in EPS over the last 10 years, nonetheless, Amazon has grown from a $0.45 EPS company to an impressive $2.42 EPS company today. This kind of growth is impressive regardless of the industry and I expect this growth to continue with AMZN. Hopefully, it’s more steady rather that a roller coaster ride.


Amazon Stock Analysis – Debt Equity Ratio

Amazon Stock Analysis - Debt Equity Ratio

Amazon Stock Analysis – Debt Equity Ratio

The latest quarter D/E ratio is at 0.56…coming down significantly from 1.06 which is a good sign. Of course, as you should know by now if you have been reading my previous stock analysis, my preference is to see a D/E ratio that’s lower than 0.50 but 0.56 is acceptable. Not great  but acceptable…


Amazon Stock Analysis – Return on Equity

Amazon Stock Analysis - Return on Equity

Amazon Stock Analysis – Return on Equity

Amazon’s ROE % over the years have declined and although this is not extremely alarming… it does send out a warning. The efficiency of AMZN management probably needs further improvement…


Amazon Stock Analysis – Operating Cash Flow

Amazon Stock Analysis - Operating Cash Flow

Amazon Stock Analysis – Operating Cash Flow

The growth in AMZN operating cash flow is pretty incredible. From a respectable 702M per year in 2016 to 11.2B in 2015. A sign of a good and solid company that’s flushed with plenty of cash which can be used for further expansion. I don’t think Amazon will ever give out dividends. Well, that’s just my opinion… who knows… things might change…


Amazon Stock Analysis – Should You Buy Amazon Stocks?

As a business, I cannot see anything wrong with Amazon. I like the business model and I like their powerful distribution system. They are the new Walmart in the information age. In fact, Walmart should be really quite worried about AMZN. The big question now remains… what is the right price or valuation for Amazon?

Should You Buy Amazon Stocks?

Should You Buy Amazon Stocks?

While I maintain that I like Amazon, both as a consumer as well as a potential stock investor, I cannot provide a price like I usually do. Amazon is just way too expensive. So by putting a price here, it will look really quite ridiculous. Let’s put it this way, AMZN is more than 10x above my valuation and I just think that it’s really over valued by the market at this moment. If you are already in position with AMZN and with some profit to show… I suggest to exit with profit. This stock is way overpriced now and with any bear market, I expect a big selloff in this one.

Decide well and Good luck! Also, please leave a comment below as I love to hear from you.

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