Fundamental Analysis
Amazon.com, Inc.
Amazon.com, Inc. was incorporated in 1994 in the state of Washington and reincorporated in 1996 in the state of Delaware. Its principal corporate offices are located in Seattle, Washington. It completed its initial public offering in May 1997 and its common stock is listed on the NASDAQ Global Select Market under the symbol “AMZN.”
Amazon.com opened its virtual doors on the World Wide Web in July 1995. It seeks to be Earth’s most customer-centric company. Amazon.com is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. In each of its segments, it serves its primary customer sets, consisting of consumers, sellers, developers, enterprises, and content creators. In addition, it provides services, such as advertising services and co-branded credit card agreements.
Amazon.com has organized its operations into three segments: North America, International and Amazon Web Services.
http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-irhome
High level decisions on buy or sell for a stock should be driven by
1. The margin that the company makes. i.e. Out of $1 that the company sells how much does the company taken home.
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- Here we see AMAZON makes a margin of 161% on Gross Level and about 5% on Net level This means that out of $1 that it makes $0.05 is being pocketed as profits.
2. The growth rates of the company on revenue, net income, EPS and Dividend. i.e. If it sold $1 last year how much more did it sell this year.
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- Here we see AMAZON grew at an astronomous rate of 33% in the revenue and the net profit figures grew by 120%.
3. The efficiency ratios of the company on Equity and Assets. i.e. How well is the company able to sweat each $1 that it puts to work in the company.
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- Here we see AMAZON makes a Return on Assets of 5% and Return of Equity of 21% which is pretty good.
Here we see that AMAZON scores high on each and every one of the parameters that we have selected when compared to our reasonable barriers except for the Operating Margin and the Debt/Equity ratio.
We see that a lot of the growth of AMAZON is being driven by the huge Debt that is being amazed and could pose a risk, but being a growing firm with great businesses that are throwing up cash in AMAZON Prime memberships, AWS usage, I would still invest in the company.
All these ratios can be found in the attached excel sheets and are based on the EDGAR report submitted by AMAZON to the SEC. All the data on the above analysis can be found at the link below
Balance Sheet
Income Statement
