Stock Valuation and Analysis

Stock Valuation and Analysis

FIN/571

Stock Valuation and Analysis

Introduction

Amazon is a multibillion dollar company that has grown considerably over decades and proven to be successful in reaching target demographics. Amazon is an e-retailer that meets consumer demand in almost every area. The company is meeting those needs from the convenience of their home through technology. In being able to meet those needs, the growth of the company has exploded and is expanding in different areas daily. In this assignment, I will review the Amazon analyst report and other key financial information necessary to evaluate the stock value and make an educated decision on whether to invest.

Stock Evaluation and Analysis

Listed below is the company stock information for Amazon. It will include the ticker symbol, stock price, market cap and other variables that are critical when deciding the viability of purchase. When choosing to purchase stocks, all information must be taken into account to prevent costly errors from occurring. Based on the stock information many analysts feel that Amazon stock is considered a strong buy and would recommend purchase. Due to stock performance on the market, it is apparent that this is a high performing stock according to trending information. The target price that analysts are predicting for Amazon stock is currently at $2.25K

Ticker Symbol of Amazon AMZN
Current Stock Price $1927.63
Market Cap $949.763B
Price to earnings Ratio 97.16
Dividend and Yield 0
Enterprise Value $964.28B
Beta 1.73
Stock Split Last stock split was September 1, 1999
Closing Stock Price for the last 5 days 07/28- $ 1909.10; 07/27- $ 1901.27; 07/26- $1893.34; 07/25- $1911.34; 07/24- $ 1927.68
52 Week High $ 2050.50
Book Value Per Share $ 98.39
What type of rating are analysts recommending (i.e. buy, hold, etc.)? Strong Buy
What is the target price analysts are predicting for this stock? $2.25K
What is the analyst’s average revenue estimate for next year? $275.24B
What are some of the significant news items and press releases made by the company over the last year? A significant new item about amazon is that Etsy shares clobbered by Amazon’s latest crafts selling effort.

Recommendation to Invest in Amazon

Amazon is the leader in the ecommerce business. According to the Department of Commerce, at roughly $395 billion, ecommerce accounted for 11.7% of the $3.4 trillion retailing market. Amazon along took on 66% of the 2016’s ecommerce growth. Amazon also has $30 billion in the cloud service market. According to Synergy Research, Amazon controls 40% of the cloud service market. Amazon’s leads in these markets has something to do with its awesome customer service. Amazon has the lead in customer service with a customer satisfaction score of 86 and has held if for 16 years. Amazon has focused less on selling books online to building a huge building loaded with robots, and gigantic computer systems, and extensive delivery networks to fulfill orders for various products. Amazon prime and Amazon echo are two reasons why amazon is on its rise (Cohan, 2017).

The average Amazon consumer spends $800 per year on the size and members of the $99/ year Prime program spends an average of 2.7 times more than others. There is also a grocery delivery service and the opening of bricks and mortar bookstores, which foresees that Amazon could be using these bookstores to refine technologies that removes the need for cashiers and relax the customer purchasing process (Cohan, 2017).

The stock price is the amount of money it will cost to purchase a share of the company. Stock prices varies because they move around based on different factors. The price to earnings ratio measures the relationship between a company’s stock price and its earning per share of stock issued. The price to earning ration is calculated by dividing a company’s current stock price by its earnings per share. Amazon’s stock price reflects the value that investors are placing on their investment. A stock’s price to earning ration shows how much investors are willing to pay for every dollar of earnings. A high price to earnings ratio indicates that investors expect higher earnings. Just because a stick has a high price to earnings ratio is not always a better investment than a lower price to earnings ratio. A company with a low price to earnings ratio indicates that the stock is undervalued. Investors will sometimes by a lower price to earnings ratio at a discount rate and profit once the price of the stock climbs (“What Is The Relationship Between P/e Ratio And Stock Price?”, 2017).

Market Capitalization and Beta.

Market Capitalization basically gives an investor what it could possibly cost to buy all the shares of the company, or its total value. Market capitalization corresponds to a company’s stage in the company’s development. Market capitalization allows investors to understand the relative size of one company versus another.

Conclusion.

Amazon is an ecommerce giant. It continues to grow and over power all other ecommerce sites. Amazon develops different products and services to advance its way to a new high. Amazon will continue to revolutionize the ecommerce world.

References

Cohan, P. (2017). 4 Reasons To Buy Amazon Before It Hits $2,000 In 2019. Retrieved from https://www.forbes.com/sites/petercohan/2017/05/31/4-reasons-to-buy-amazon-before-it-hits-2000-in- 2019/2/#4e9da1547c23

Ross, S., Westerfield, R., Jaffe, J., Jordan, B. Corporate Finance. [University of Phoenix]. Retrieved from https://phoenix.vitalsource.com/#/books/1259882861/

What Is the Relationship Between P/E Ratio and Stock Price? (2017). 

Yahoo Finance. (n.d.). Amazon.com, Inc. (AMZN). Retrieved from Yahoo Finance: https://finance.yahoo.com/quote/AMZN?p=AMZN&.tsrc=fin-srch