Analyzing Amazon’s comprehensive valuation
Amazon (AMZN) has an enterprise value (or EV) of ~$459.5 billion. This metric provides a comprehensive measure of a company’s total value to investors, and it’s used as an alternative to a company’s equity market cap valuation.
Amazon’s trailing-12-month EV-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) multiple is 35.8x. Its EV-to-estimated EBITDA multiple is 24.3x. Its EV-to-sales multiple for the trailing 12 months is 3.2x, while its EV-to-sales multiple is expected to be 2.3x next year.
Amazon’s trailing-12-month EV-to-cash flow multiple and trailing-12-month EV-to-free cash flow multiple are 27.3x and 48.9x, respectively.
Earnings and sales
The company reported EPS (earnings per share) of ~$5 in 2016, and its EPS for 2017 are expected to be ~$6.68. Last year, its total sales of $142.6 billion reflected an annual rise of 26%. Its sales are expected to rise to ~$166.1 billion in 2017 and ~$200.8 billion in 2018.
Inside Amazon’s price metrics
With a book value per share of ~$46.02, Amazon is trading at a price-to-book value of 21.8x. The stock’s estimated book value per share is ~$53.9. Its price-to-sales ratio is 3.3x, and its estimated price-to-sales ratio is 2.9x.
Is Amazon an investment or junk?
Moody’s rating on Amazon’s debt is WR (withdrawn rating). The company has an S&P debt rating of AA- and a debt outlook of “stable.”