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AMZN, to a capital payer again, but priced-in
Current, target price USD3,292, 3,511 (+7%)
May 10th, 2021
1 minute read
Sales, seasonally lower but strong
Cashflow, expecting a return to lower investment spending
1 minute read
Sales, seasonally lower but strong
- Sales declined seasonally by -14% in the first quarter to 108,518 million dollars, which is +1% compared to our forecast.
- This is after a 31% increase in the fourth quarter & brings the quarterly average growth to 11%!
- We predict average growth of 5% a quarter in this next 12 months which will bring sales to 127,467 million dollars by the first quarter of 2022.
Cashflow, expecting a return to lower investment spending
- Cashflow was a big negative -11,275 million dollars in the first quarter after positive 14,867 million dollars in the fourth quarter on higher investment spending.
- Average quarterly cashflow is now positive 3,516 million dollars.
- We use much lower investment spending of -8,512 million dollars, which with higher sales, gives a higher average quarterly cashflow of 6,439 million dollars in this next 12 months.
Sales down seasonally but strong, margins new high, but cashflow negative on higher investment, expecting lower investment, strong cashflow & a return to net capital payer, but priced-in, lower target price...
Balance sheet, slowdown in leverage
Profit, margins higher
Value, to a capital payer again
- The net leverage of cash minus total liabilities was up slightly to -185,923 million dollars in the first quarter from -185,669 million dollars in the fourth quarter & more from -128,765 million dollars a year ago.
- With our forecast higher cashflow & assuming a dividend payout of -23,143 million dollars...
- ...net cash will be -169,687 million dollars in 12 months time.
Profit, margins higher
- Net profit was higher at 8,107 million dollars in the first quarter from 7,222 million dollars in the fourth quarter...
- ...as the cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was down to -83%.
- We use average -86% costs, to predict a higher next 12 months profit of 33,061 million dollars.
Value, to a capital payer again
- AMZN cumulative net capital is at -16,044 million dollars from the last six years, but will turn positive now.
- At the current market value of 1,660,000 million dollars, based on forecasts it’s 71.14X capital paid, 3.23X sales, 5.24X assets, 14.66X equity, with a 29% profitability & a 1.4% yield.
- Our free cashflow forecast is 25,755 million dollars. At 1.6% with a 1.1X adjustment, gives a 7% higher target price of 3,511 dollars.
