AMAZON.COM STOCK PROFILE ANALYSIS

Amazon.com stock profile analysis

Amazon.com stock profile analysis

Amazon.com, Inc. (NASDAQ: AMZN) is an American electrical devices commerce (e-commerce) business in Seattle, Washington. Amazon was one of the first major businesses to sell items by Internet, and was an iconic "stock in which to invest" of the late 1990s dot-com bubble. After the collapse, the public became skeptical about Amazon's business form, whereas it has since stayed profitable.

A comparison with the industry and sector is done on amazon.com. There may be difference in the accounting methods of the companies. For example, different stock taking methods may have been used, with some companies using LIFO, some using FIFO or Weighted Average Method or Simple Average Method. The industry may not have taken into calculation certain items like equity earnings or minority earnings.

The comparison is done on the current year and also on a 5 year average for some ratios. The industry, sector and market are compared to the company using certain ratios only in the following table:

 

I. LIQUIDITY:

 

AMZN

Industry

Sector

S&P 500

Quick Ratio

0.81

1.39

1.22

1.04

Current Ratio

1.12

1.64

1.53

1.28

Accounts Receivable Turnover

33.99

4.70

5.15

10.63

Inventory Turnover

13.51

1.60

5.16

9.76

 

II. LONG TERM DEBT-PAYING ABILITY:

 

                        AMZN

Industry

Sector

S&P 500

Total Debt to Equity                                                                                        93.40

27.85

65.30

190.82

Interest Coverage

47.67

19.32

0.19

32.79

 

III. Profitability ratios:

 

AMZN

Industry

Sector

S&P 500

Return on Assets

10.69

1.47

2.31

8.12

Return on Assets - 5Yearr. Avg.

9.16

5.78

4.53

7.55

 

Return on Investment

24.60

2.93

3.70

11.03

Return on buying into - 5 Yr. Avg.

20.25

11.65

6.80

10.07

 

Return on Equity

55.73

5.56

6.50

19.13

Return on Equity - 5Yearr. Avg.

--

10.91

10.27

20.29

Asset Turnover 

3.34

0.44

0.51

0.79

 

 

         AMZN

Industry

Sector

S&P 500

Gross Margin

22.50

12.18

12.97

35.63

Gross Margin - 5 Yearr. Avg.

23.17

41.91

26.55

36.54

 

Operating Margin

4.44

1.69

3.57

--

Operating Margin - 5Yearr. Avg.

4.73

6.40

8.19

17.93

 

 

 

Net Profit Margin

3.20

1.04

2.17

11.26

Net earnings Margin - 5 Yr. Avg.

3.51

4.00

5.19

12.41

 

Effective Tax Rate

29.46

9.31

21.35

26.51

Effective levy Rate - 5 Yr. Avg.

12.75

42.53

36.90

30.52

 

Analysis:

 

 

I. LIQUIDITY:

Amazon.com's Quick ratio is lower than that of the industry, sector and of market. This would be influenced by more liquid receivables and inventory.

The Current Ratio of amazon.com is approximately similar to that of the industry, sector and market

Accounts Receivables turnover Amazon.com is substantially very highly liquid than of the industry, sector and market. It's because amazon.com uses a shorter credit term compared to other companies in the industry and sector.

 The Inventory Turnover for amazon.com is substantially high to the industry and sector than to the market. This may be because the different firms in the industry use different costing methods from the one used by amazon.com

 

Summary:

The comparison of amazon.com with the industry, sector and market is not very good in the liquidity point of view.

II. LONG TERM DEBT-PAYING ABILITY:

The debt equity is higher for amazon.com compared with the industry but lower compared with the sector and market.

The Interest coverage of amazon.com is materially high to that of industry and sector than to that of the market. Hence it is very good.

 

Summary:

The Long term debt-paying ability of amazon.com appears to show a positive trend than that of the industry

 

III. PROFITABILITY:

The Gross margin and Net profit margin of amazon.com is comparatively higher and better than that of the industry and sector but lower than that of the market

All other profitability ratios shows a higher and materially better trend than the industry,sector and market

 

Summary:

The Profitability of ...