AMZN Stock Report

2-Year Price History

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Ockham's Rating

AMZN Stock Evaluation

Because of a relatively quiet week from a price movement perspective, there has been little change in the valuation of AMZN recently. Furthermore, there has been no change to the earnings guidance given by the company's management in the last week. Those are two key factors in our fundamental analysis which are unchanged since our last report. In accordance with these static factors, we see no catalyst for a ratings change this week.

AMZN Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at AMZN through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 2.90x and 1.16x respectively.

Utilizing this range we can see that AMZN’s current Price to Sales per share ratio of 1.36x is significantly below its average levels historically. In fact, with a current price of $79.32, AMZN is a full 34% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for AMZN.

AMZN Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. AMZN is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for AMZN, the current level of Cash Earnings compared to its historical levels helps identify where AMZN is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 65.26 and a historical low Cash Earnings per share ratio of 30.29, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for AMZN? From the Ockham perspective, we are looking specifically at AMZN to see if the market is recognizing the huge disparity between AMZN's past stock price to Cash Earnings ratio to today's levels. At a difference of 33% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at AMZN. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

AMZN Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely. Although they may currently pay a dividend, our data source has no historical record of it for AMZN. Since we cannot apply our historical trend analysis to dividends for AMZN we have a neutral score for the dividend portion of our analysis.