Post of the Day
December 28, 1998
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Subject: Amazon: A $17.0 B Comparison
Since the market now values Amazon at over 17 billion dollars, I thought it might be interesting to compare Amazon with other companies of similar market size. The following comparison is based on data from the Value Line Investment Survey for Windows. The database update I used was valid as of 22 December, 1998.
To accomplish this comparison I first screened Value Line's database for companies with a market capitalisation between $16.0 and $18.0 billion. The screen returned 16 stocks representing 12 different industries. For the purpose of the comparison below, we will call this group our Sample Group. The data you see below for the Sample Group represents the average for the 16 stocks in the group.
In the second column we have the relevant data for Amazon. Finally to save you some calculator battery life, I have included a third column showing a percentage calculation that compares Amazon to the Sample Group average. This relative percentage is shown in the third column. In several places in the table you will see "n/a" instead of a value. While this may indicate that the data is unavailable, in most instances it means that the applicable figure is either zero or negative. Two examples are dividend (zero) and profit (negative). P/E for example has no meaningful figure (since it would be negative). All dollar figures, except for per share data, are in millions unless otherwise noted. Amazon's (pre-split) price at the time of the comparison was $322.38.
Sample Relative Criteria Group Amazon Percentage ----------------------------------------------------------- PE (Last 12 Mo) 30.11 n/a n/a Beta 1.11 n/a n/a Dividend Yield (%) 1.54 n/a n/a Market Cap 17,058 17,009 99.7% Sales (TTM) 9,571 423 4.4% Net Income (TTM) 634.99 -59.14 n/a EPS (TTM) 2.33 -1.23 n/a Earnings Yield (TTM) 4.29 n/a n/a Net Income 651.43 -27.59 n/a Cash 1,417 125 8.8% Accounts Recv. 2,120 n/a n/a Inventories 1,115 8.97 0.8% Net Plant 3,086.5 9.3 0.3% Total Assets 49,545 149 0.3% Accounts Payable 1,437.7 32.7 2.3% Long-Term Debt 3,657.2 76.7 2.1% Net Worth 4807.4 28.5 0.6% Com Shares Outstanding 351.51 47.87 13.6% Total Capital 8,464.6 105.2 1.2% Cash Flow 935.82 -24.2 n/a Free Cash Flow 964.31 61.04 6.3% Working Capital 1,596.0 93.52 5.9% Sales Per Share 29.04 3.09 10.6% Price Sales Ratio 3.17 37.85 1,194.0% EPS 2.25 -0.64 n/a Book Value Per Share 16.51 0.59 3.6% Price to Book Value 3.41 31.82 933.1% Cash Flow Per Share 3.01 -0.51 n/a Gross Margin 46.12 21.79 47.2% Net Profit Margin (TTM) 7.69 n/a n/a Dividend Payout 34.48 n/a n/a Current Ratio (LQ) 1.15 5.14 447.0% EPS Growth 1-Year 17.66 n/a n/a Sales (LQ) 2,362.1 116.0 4.9% Net Income (LQ) 145.07 -21.23 n/a EPS 10Q (LQ) 0.54 -0.44 n/a Current Assets (LQ) 3,273.7 369.4 11.3% Long-Term Debt (LQ) 4,517.3 332.4 7.4% Net Worth (LQ) 4,360.6 39.4 0.9% Inventory Turnover 5.87 24.22 412.6% Tot Return 1-Year 25.26 675.76 2,675.2% Current Dividend 1.20 n/a n/a Current EPS 2.35 -2.04 n/a Est EPS 4th Qtr Out 0.75 -0.39 n/a Proj 3-5 Yr % Apprec 24.67 -51.14 n/a Proj EPS Growth Rate 13.43 n/a n/a ----------------------------------------------------------- TTM = trailing twelve months LQ = latest quarterAs you can see from the above table the data for Amazon is vastly different than the Sample Group average, with most values being at one extreme or the other. Some of the data are particularly interesting.
Let's have a look at the numbers for Sales (TTM). If Amazon could manage to increase sales by 50% per year, it would take eight years to beat the Sample Group average. That assumes zero sales growth by the Sample Group. Also, it is unlikely that Amazon could maintain such a sales growth rate since the actual rate for Amazon is already slowing down quickly. For the figures, see my previous post number 11209.
All traditional value ratios for Amazon are extremely high. Amazon's Price/Sales ratio for example is nearly 1200 percent greater than that of the Sample Group. Figures for Net Income, EPS, Cash Flow, and Projected 3-5 Year % Price Appreciation are all negative.
There are several other points of interest but I should probably stop now since this message is quite long.
The companies that make up the Sample Group are: 3 Com, Albertson's, Bank of Nova Scotia, CIGNA, Cadbury Schweppes, Cendant, Cox Communication, Firstar, Fuji Photo (ADR), Lowes, MNBA, Mellon Bank, J.P. Morgan, Pitney Bowes, Repsol (ADR) and Wachovia.
I hope you have found the above data informative.
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