Tuesday, May 7, 2013

Analysis of Amazon

An American online store for everything

Company: Amazon

Business: I´m sure all of you know it and buy by them. The sell everything over post (also electronic). It is interesting to see how a market that was almost dying due to email etc. have now increased again due to these type of companies.

Active: They currently have retail websites for the following countries: United States, Canada, United Kingdom, France, Germany, Italy, Spain, Brazil, Japan, and China. They keep expanding and fast.

P/E: -2928.9


Since amazon had a bad third quarter in 2012 we get a negative running P/E. The price to book is also very high. Earning per sale also does not give something useful. The book to debt is semi ok even though I would have favoured less debt but I guess it comes from their pushed massive expansion and growth. When we calculate the yearly growth it is massive... really massive and they have had a yearly growth of 26% the last five years. For Lynch this gives a motivated P/E of over 95 and for Graham a P/E around 60 so a big difference between them. However when I make a "corrected" earnings calculation then the running P/E would still be over 100. they pay no dividends to their shareholders.

Conclusion: Excellent growth company that to me seems to be expensively valued on the market. I would not buy Amazon today.


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