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A Quick Glance At Amazon’s Valuation

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Jul. 21 2017, Updated 9:05 a.m. ET

Analysis of Amazon’s price and book value figures

Amazon (AMZN) is trading at a price-to-book value of 22.1x. The stock’s price-to-sales ratio is 3.4x, while its price-to-estimated sales ratio is 2.9x.

The company has an EV (enterprise value) of $464.4 billion, which implies that the company has a current EV-to-trailing-12-month-sales ratio of 3.3x. Its EV-to-estimated sales ratio for 2017 is 2.3x.

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Where do Amazon’s earnings stand?

Amazon’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin for 2016 was 9%, which yielded EBITDA of $12.8 billion—a 35% fall from the prior year. For 2017, Wall Street is expecting EBITDA of $18.8 billion from the company. Its EV-to-adjusted EBITDA ratio for 2017 is expected to be 24.7x. Amazon shares are trading at a price-to-EBITDA ratio of 37.2x.

In comparison, peers Twitter (TWTR), PayPal (PYPL), Yelp (YELP), and Groupon (GRPN) are trading at price-to-EBITDA ratios of 88.4x, 29.2x, 56.5x, and 32.7x, respectively.

Earnings and sales

Amazon’s EPS (earnings per share) for last year came on total sales of $142.6 billion, which grew 26% from the year prior. Sales are expected to expand to ~$200.7 billion in 2017.

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Inside Amazon’s cash flow metrics

Amazon has cash on hand of $21.5 billion. The stock is trading at a price-to-cash flow ratio and a price-to-free-cash-flow ratio of 28.5x and 50.9x, respectively. The company’s trailing-12-month EV-to-cash-flow ratio is 27.6x, while its trailing-12-month EV-to-free-cash-flow ratio is 49.5x.

Amazon’s credit rating

Moody’s rating on Amazon’s debt is “WR,” meaning “withdrawn rating.” The company also has an S&P debt rating of “AA-” and a stable debt outlook.

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