A Look at Amazon’s Fundamental Analysis
Deciphering Amazon’s comprehensive valuations
Amazon (AMZN) has an EV (enterprise value) of ~$461.7 billion. Peers Alphabet (GOOG), eBay (EBAY), PayPal (PYPL), and Yelp (YELP) have enterprise values of ~$557.4 billion, ~$41.4 billion, ~$67.4 billion, and ~$2.8 billion, respectively.
Amazon’s EV-to-adjusted-EBITDA1 multiple for the trailing 12 months is 35.7x. Its EV-to-estimated-EBITDA for 2017 is 25.9x.
The company’s EV-to-sales multiple for the trailing 12 months is 3.1x, while its EV-to-sales ratio is expected to be 2.2x in 2017. Amazon’s trailing-12-month EV-to-cash-flow multiple is 27.1x, and its trailing-12-month EV-to-free-cash-flow is 52.2x.
Inside Amazon’s price metrics
With a book value per share of ~$48.50, Amazon is trading at a price-to-book value of 20.5x. The estimated book value per share of the stock is ~$53.50 for 2017.
Amazon’s price-to-sales ratio is 3.2x, and its estimated price-to-sales ratio is 2.8x for 2017.
Dissecting Amazon’s debt situation
Amazon’s balance sheet reflects total debt of $7.7 billion. The company reported total capital of ~$30.9 billion. As a result, its total-debt-to-total-capital ratio is 25%.
The company’s debt-to-assets, debt-to-equity, and debt-to-EBITDA ratios work out to 0.09, 33.10, and 0.60, respectively. Amazon’s EBIT-to-interest ratio is 25.9x. This ratio relates to the company’s ability to pay interest on outstanding debt. The company has a debt-to-enterprise value of 2%.
Earnings and sales
Amazon’s earnings per share (or EPS) for 2016 came on total sales of $150.1 billion, which grew 24% annually. Sales for this year are expected to increase from ~$168.8 billion in 2016 to ~$205.9 billion in 2017.
Amazon’s credit rating
Moody’s rating on Amazon’s debt is WR. The company also has an S&P debt rating and debt outlook of AA- and “stable,” respectively.
- enterprise value to adjusted earnings before interest, tax, depreciation, and amortization ↩