Amazon stock will rise as growth continues

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[Updated 08/13/2021] Amazon update

Amazon stock gained 3% YTD, and at its current price of $ 3,306 per share it has a fair value of $ 4,257 – Trefis estimate for Amazon’s rating. Amazon is expected to continue to grow as the transition to e-commerce continues and digitization in organizations accelerates. In recently released second quarter 2021 results, Amazon reported revenue of $ 113.1 billion, up 27% year-on-year, while profits rose to $ 15.12 per diluted share from $ 10.30 per diluted share, during the same period of the previous year. The company continues to make progress in live streaming as it has also signed an agreement with Ligue 1 in France to broadcast more than 300 football matches per season.

We are waiting Amazon revenue increase by 27% to reach $ 488 billion for 2021. In addition, its net income is expected to reach $ 29.5 billion, which will bring its 2021 EPS to $ 63.46. For 2022, we expect revenue to continue growing to $ 568 billion, increasing its net income to $ 37.6 billion and EPS to $ 73.73, which, coupled with the P / E multiple of 57.7x, will lead to Amazon’s rating of $ 3,306, up 29% from current market price.

[Updated 05/28/2021] Amazon stock will continue to rally?

Growing by 75% since the end of 2019, Amazon stock still has short-term growth potential. AMZN’s stock has risen from $ 1,848 at the end of 2019 to $ 3,230 now, compared to the S&P 500 which has gained 69% since late 2019. The company has profited immensely from the coronavirus pandemic as consumer preference has shifted is being moved to traditional online commerce. They posted 2020 revenue of $ 386 billion, up 38%, while profits were recorded at $ 42.64 per share from $ 23.46 per share the previous year. This momentum continued in the first quarter of 2021 as the company beat consensus estimates with revenue of $ 108.5 billion, up 44% year-on-year, and profits were recorded. at $ 16.09 per share compared to $ 5.09 in the same period of the previous year. Revenue growth was led by the International segment which recorded 60% year-over-year growth for the quarter.

We believe that the transition to e-commerce will continue around the world and with the advent of digitalization in all organizations, Amazon’s web services are expected to continue to grow at a high rate.

We are waiting Amazon revenue increase 27% to $ 488 billion for 2021. In addition, its net income is expected to reach $ 32.5 billion, increasing its 2021 EPS to $ 63.46, which, together with the P / E multiple of 67x, will lead To Amazon’s rating of $ 4,241, a 30% increase over the current market price.

[Updated 01/11/2021] Amazon update

Up 72% since the end of 2019, Amazon stock still has short-term growth potential. AMZN’s stock has gone from $ 1,848 at the end of 2019 to $ 3,183 now. The company has seen strong revenue growth in recent years and its P / E multiple has declined from 2017. We believe the stock, after the recent rally, has good near-term potential.

During the Covid-19 crisis, Amazon saw its revenue increase by 35% in the first 3 quarters of 2020, with consumers preferring online shopping to reduce the risk of infection. In the third quarter of 2020, Amazon topped consensus estimates for revenue of $ 96 billion, up 37% year-on-year and profit of $ 12.63 from $ 4.31 at the same. period of the previous year. In addition, the company reported $ 146 billion in cash inflows from operating activities for the first nine months.

We expect Amazon’s revenue to grow 31% to $ 369 billion in 2020. In addition, its net profit is expected to reach $ 19.5 billion, which will bring its EPS to $ 38.21 billion in 2020. Subsequently, revenue is expected to increase further to $ 435.3 billion in 2021. In addition, the EPS figure will likely improve to $ 60.52, which together with the P / E multiple of about 62x, will result in a valuation of Amazon around $ 3,758, which is about 18% up from the current market price.

[Updated 07/10/2020] Amazon’s stock is at an all time high, but will it rise further?

After rising nearly 70% since the market bottomed on March 23 of this year, we believe Amazon stock has no room for growth at its current record price of around $ 3,200 per share. While the company is expected to continue to experience strong revenue growth for the foreseeable future, and the growing contribution from its high margin Amazon Web Services business is also expected to have a positive impact on profit margin, we believe the current figure of the P / E multiple of almost 140x is already too high – making further stock price gains very unlikely.

AMZN’s stock rose from around $ 1,900 to $ 3,200 as of March 23, 2020 – better than the S&P 500, which rose around 41% during that time. The share price soared as Amazon took advantage of millions of people in the United States and abroad turning to online marketplaces to meet their basic needs such as groceries, food, toiletries and medicines. In these uncertain times when companies are cutting wages and jobs, Amazon has raised wages and hired more than 100,000 warehouse and delivery workers – and plans to hire more as it struggles to meet demand. huge and unexpected increase in demand. At the end of April 2020, the company had a workforce of 935K employees. In the first quarter of 2020, the company recorded a 26% growth in turnover compared to the previous year.

Part of the increase in stock prices over the period 2016-2019 is justified by the fact that revenues have more than doubled. Amazon revenue grew from $ 136 billion in 2016 to $ 281 billion in 2019, mainly thanks to the contribution of Retail

IVR
North America segment sales. The improvement in the net margin from 1.7% in 2016 to 4.1% in 2019 allowed the net income to increase by 137% over the period.

The share price rose during this period as margins and revenues increased, despite normalizing the P / E multiple from 150x in 2016 to 79x in 2019. However, the multiple increased again this year, as people turn to online retail and web services. during the coronavirus pandemic, and the figure is currently at a high level of around 140x.

Coronavirus effect

The global spread of the coronavirus has resulted in lockdowns in various cities around the world, affecting industrial and economic activity. This is likely to negatively affect consumption and consumer spending. Notably, Amazon’s stock has increased by around 58% since Jan.31, after the World Health Organization declared a global health emergency in light of the spread of the coronavirus. However, during the same time period, the S&P 500 Index experienced a decline of about 2%. Despite the coronavirus pandemic, the company saw 26% growth in total revenue in the first quarter of 2020. Amazon’s web services led the recorded revenue growth to 33% year-on-year, while sales revenue retail in North America grew 29% year-on-year. That said, the drop in consumer spending and consumption over the next few months could likely lead to lower demand for discretionary items, as consumers will focus on the essentials.

The actual recovery and its timing depend on the wider containment of the spread of the coronavirus. Our dashboard Trends in Covid-19 cases in the United States provides insight into the spread of the pandemic in the United States and contrasts with trends in Brazil and Russia. With investors focusing their attention on the 2021 results, valuations become important in finding value.

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