To prepare for writing on a company I like to listen to the last couple of investor presentations. That works well for me to get a feel for a company, its management, and also the plans and strategies that the company has for increasing the share price.
This works well for most companies, but not Amazon (AMZN). Other than earnings calls (which are just statements of the quarterly numbers) Amazon does not participate in investor presentations.
One way to gauge how well the company is doing is by looking at the metrics that show that the company continues to have the more free cash flow to pay for things. Two big metrics for me are the size of the company in terms of employees, as well as what the company is willing and able to pay its employees.
Amazon has doubled its workforce over the past two years. This is largely in response to the COVID pandemic that has increased the rate at which people are switching from in-person retail to online retail.
The company has also announced recently (according to NPR) that the company has doubled the possible base pay that it will offer candidates to as high as $360,000 per year.
For anyone who does not know, the company operates in industries as varied as Internet retail, computer services, and selling groceries through physical storefronts (through wholly owned Whole Foods Market).
I also find it convincing that all 33 Wall Street analysts that cover the stock rate it a Buy. Also, the lowest price estimate for 12 months from now is $3,600 per share. That is a $600 increase from current trading levels/
The stock has recently soured because of a huge earnings miss as well as announcing that Amazon Prime membership will also cost $139 per year after March 25, 2022.
Recent Results and Dividend
Amazon’s stock has been trading between $2,707.04 (the 52-week low set on January 26, 2022) and $3,773.08 (the 52-week high set on July 8, 2021).
Amazon brought in revenues of $469.8 billion over the last 12 months and net income of $33.4 billion over the same period.
The company has reported fourth-quarter earnings of $27.75 per share, missing analyst estimates of $3.61 per share by $24.14. It has also reported $64.78 in earnings per share for 2021, beating analyst estimates of $34.28 by $30.50 during that period.
Amazon does not currently pay a dividend.
The company has a very solid balance sheet. AMZN has a current ratio of 1.14, so it has enough current assets on hand to pay its bills for over a year.
When I calculated the stock’s intrinsic value by modeling discounted cash flows, I pegged it at $4,600. I do not think this stock needs a particular catalyst. This company just needs to keep doing what it is doing day in and day out.
Wall Street’s Take
Thirty-three Wall Street analysts currently cover Amazon and have issued 12-month estimates for the price. The average Amazon price target of $4,207.87 suggests 41.4% upside potential.
TipRanks.com shows that of the 163 bloggers that have blogged about Amazon, 93% of them are bullish, while the sector average is approximately 75% bullish.
Conclusion
Based on the intrinsic value of this stock, Wall Street estimates, blogger estimates, as well as the company’s track record, I am very bullish on this stock.
I think Amazon has shown that it is the Internet powerhouse to beat, and that this company will make its investors a lot of money in the years and decades to come.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
