Amazon IPO'd in 1997 as an online bookstore. They named themselves the world's largest online bookstore. Amazon is impressive because of their background, because when the dot-com bubble burst many ecommerce stores went out of business. Amazon survived. Today Amazon is the leader in ecommerce sales. They accounted for 53% of all online sales growth in 2016 (Cassar, 2017).
This evaluation was performed on April 22, 2017, in anticipation of Amazon's Q1 2017 report. The evaluation is to determine if Amazon will be most likely profitable for the investor for the full 2017 fiscal year based on its previous Q4 2016 report and the direction Amazon is heading in.
This report is looking at U.S. Markets and Industries and Amazon's growing space in them. The quantitative data for Amazon is from Amazon's Q4 report. The quantitative data for the eCommerce Market Size is from the International Trade Administration, and Census.gov, as well as Slice Intelligence. The report is going to analyze Amazon's position in the market of retail and eCommerce, and Amazon's potential in the future of those markets.
- * Beta of 1.4. Underperforms market 40% more, outperforms market 40%.
- * EPS 4.9, making money.
- * Forward P/E of 72 down from 183 TTM
- * ROE of 14% beautiful!
- * Quarterly revenue growth of 22%
- * EBITDA 11.6b
- * Long term debt of 7.6b, liabilities of 12.7b.
- * EPS Beat 3 times in 2016 for Q1, Q2, Q4.
- * Amazon has increased Q4 net sales by 22% in one year from Q4 2015.
- * Amazon has increased net sales by 27% in one full fiscal year.
- * Amazon has quadrupled their net income in one full fiscal year.
- * Amazon is competing in a massive market.
- * Assets have increased by 28.8% from Q4 2015 to Q4 2016.
- * Long term debt has decreased by 570m from Q4 2015 to Q4 2016.
- * Long term liabilities have increased by 3.4b from Q4 15 to Q4 16.
- * 16.4b in free cash flow from operating activities at the end of 2016 for Q4.
- * Operating income of 4.2b in 2016. Better to use operating income because of the variety of products and services, more so than gross profit.
- * Operating Expenses Internationally has accounted for 99.5% of cost of revenue for Q4 2015 and 102% in Q4 2016.
- * International sales grew by 12% Q4 2015 vs 18% in Q4 2016
- * Net Worldwide sales TTM have increased steadily by 27% since Q3 2015.
- * TTM Net sales worldwide have increased steadily by 6% per quarter.
- * 1.3b international operating income loss due to infrastructure and marketing efforts offset by increased unit sales.
- *North America. Market sales was 79.79b
- * North America sales grew by 24% in Q4 2015 vs 22% in Q4 2016.
- * In North America Amazon is competing for a 660b eCommerce market as of 2017.
- * Operating expenses has accounted for 95% of the cost of revenue in North America for Q4 2015 and Q4 2016.
- * eCommerce market accounted for 8.3% of total retail U.S. sales as of Q4 2016 up from 7.6% Q4 2015.
- * eCommerce grew 1.9% from previous quarter.
- * Grew 14.3% from Q4 2015.
- * The average eCommerce adjusted growth when compared to prior year's quarters is 15.28%
- * If eCommerce grows at a rate of 15.28, eCommerce retail sales will be at 426b Q4 2026.
- * eCommerce total annual retail sales in the U.S. for 2015 were 340b.
- * eCommerce total annual retail sales in the U.S, was 484b in 2016.
- * Amazon and Prime now accounted for 43% of all revenue generated in the U.S. online market.
- * Worldwide Amazon is competing for the eCommerce market worth 1.3 Trillion as of 2014.
- * Compare this to Google who is competing for the advertising market worth 500b.
- * Retail is declining as brick and mortar companies are losing sales to online.
- * Retail market for the U.S. is 5.48 trillion as of 2016.
- * Worldwide retail market is 14 Trillion.
- * TOAL SALES FOR 2016 eCommerce were 484b
- * As of Q4 2016, 8.8b in debt.
- * Has to pay 5.22b debt in 8 years by calculating note coupons, face value, and maturity.
- * Dividend potential
- Massive growth into massive market
- * Amazon's growth is substantial because it is a young company expanding worldwide into a market of huge scale. Their growth is backed up and supported by eCommerce annual sales growth, as well as the conversion of retail sales to online sale growth.
- * Amazon has huge estimates for revenue, increasing 30b in one year. This is very large growth which contributes to a higher chance of higher operating income as well as dividends.
- * Dividends in the future will be huge! And while Amazon is still a young company, they have no reason to provide dividends just yet.
- * The large macro view of these markets and Amazon's step ahead puts Amazon very far in the future and could be the #1 company by market cap in a decade.
- * I don't have any open positions, or plan to open any this month. But It is on my watchlist because I think it a long term investment.
[Youtube video on Amazon earnings](https://youtu.be/4VzB96H6iZE)
[Census.gov information on eCommerce market size in the U.S.](www.census.gov/retail/mrts/www/data/pdf/...)
[Slice Intelligence Data on regional eCommerce size](www.export.gov/article?id=eCommerce-Mark...)
[The extraordinary size of Amazon in one chart](www.visualcapitalist.com/extraordinary-s.../)
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in AMZN over the next 72 hours.