- Analyst EPS forecasts for Amazon are excessive, particularly at a time when the likelihood of an earnings correction is high in the broader market.
- Amazon is expensive on each of the P/E, P/S, P/B, P/FCF and Ev/Ebitda multiples, suggesting low returns based on the tests we carried out dating back to 2000.
- Despite low ROE and profit margins, Amazon is ranked highly in terms of asset turnover due to its strategy of increasing market share before increasing profit margins.
- The longer-term price trend remains up but it is critical the 100-week moving average support around $289 holds.
- Trend direction, momentum and condition are exhibiting similar characteristics to those seen in December 2011, giving investors some cause for optimism that this is just a healthy correction.