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AMZN Continues to Build

Amazon.com (AMZN) continues to be a strong stock even though it probably won’t make a profit this year. Amazon is investing its money in building new order fulfillment centres across the globe. Construction costs are taking away profits. But in the next few years, AMZN could be raking in the dough.

One Year Chart

AMZN has had a solid year even though profitability has been poor. In fact, the numbers keep getting worse. Earlier in 2012 AMZN was making a profit (-58% year over year, but still a profit) as it beat the street. Last quarter the company lost money in missed by 52 cents. Still, the stock didn’t take it on the chin because investors know the new warehouses will bring in more profit.

How much profit? The company is expected to make $1.76 next year (not much $), then make $3.80 in 2014 (also not impressive). The gravy train looks to be coming in 2015 when its estimates AMZN will make $8.03. With a $228 stock price (as of when these charts were built) that equates to a 28 P/E on 2015 estimates. 2015 is a long way away. The estimate for 2016 is $11.50, but I could be dead by then.

Fair Value

If we give AMZN a Fair Value P/E of 45, the stock would be worth $171 two years from now. I feel looking out to 2015 is too far out. Who knows what the company will make that year? Maybe it will continue to build and make nothing.

Sharek’s Take

AMZN is a different investment. One would really have to dive into the numbers and do serious analyst work the get a fair price for this stock. In the end, profits are the name of the game in my book, and I’m choosing to pass on this stock until I get more clarity on the long-term profit picture.

View the Earnings Table here.
View the Ten Year Chart here.

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