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AMZN, surge in payouts coming
🎯 📱 📈 USD3,576
Last 12-month cashflow -USD 25BN ⬇️⬇️⬇️
November 2nd, 2020
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Sales
Sales growth was a little lesser in the 3Q, +37% from +40% in the 2Q. This continues the amazing 5 year run of double digit sales growth. Sales USD 96.1BN were up +8% from the 2Q. Product sales increased +5% while services were up +12%. We expect the growth to continue with +26.5% this next 12 months to USD 440.1BN.
Cashflow
Cashflow was negative -USD 1,423M in the 3Q & has been negative for the last four quarters as investment spending has surged. The peak spending was in the 4Q & is now starting to slow down. With lower investment spending combined with our forecast higher sales, average quarterly free cashflow will be positive +USD 7,647M in this next 12 months.
Sales growth was a little lesser in the 3Q, +37% from +40% in the 2Q. This continues the amazing 5 year run of double digit sales growth. Sales USD 96.1BN were up +8% from the 2Q. Product sales increased +5% while services were up +12%. We expect the growth to continue with +26.5% this next 12 months to USD 440.1BN.
Cashflow
Cashflow was negative -USD 1,423M in the 3Q & has been negative for the last four quarters as investment spending has surged. The peak spending was in the 4Q & is now starting to slow down. With lower investment spending combined with our forecast higher sales, average quarterly free cashflow will be positive +USD 7,647M in this next 12 months.
Sales to grow 27%, free cash flow will return & lead to a surge in payouts, shares can still rise...
Balance sheet
The balance sheet is a little tricky to gauge. Net debt declined by our measure from 2Q USD 38.5BN to USD 27.1BN in the 3Q while at the same time equity declined from USD 73.7BN to USD 62bn... With our forecast positive cashflow & a dividend of USD 24BN, net debt will decline to USD 21BN in 12 months time.
Profit
With higher sales, net profit tripled from a year ago to a record USD 6,331BN in the 3Q! The cash costs ratio of net profit add back non cash costs minus sales as a % o % of sales was steady at 85%. We use this 85% to predict a next 12 months profit of USD 34.6BN up by +99%.
Value
AMZN is a net capital payer but payments have slowed down recently with the negative cashflow. Now we forecast a surge! At USD 1,521BN, it’s 104X capital paid, 3.5X sales, 6.6X assets, 21X equity with a 48% profitability, 1.6% yield. Our cashflow forecast is USD 30.6BN. At 1.6% with a 1.1X adjustment because of fast growth gives a target, USD4,198.
The balance sheet is a little tricky to gauge. Net debt declined by our measure from 2Q USD 38.5BN to USD 27.1BN in the 3Q while at the same time equity declined from USD 73.7BN to USD 62bn... With our forecast positive cashflow & a dividend of USD 24BN, net debt will decline to USD 21BN in 12 months time.
Profit
With higher sales, net profit tripled from a year ago to a record USD 6,331BN in the 3Q! The cash costs ratio of net profit add back non cash costs minus sales as a % o % of sales was steady at 85%. We use this 85% to predict a next 12 months profit of USD 34.6BN up by +99%.
Value
AMZN is a net capital payer but payments have slowed down recently with the negative cashflow. Now we forecast a surge! At USD 1,521BN, it’s 104X capital paid, 3.5X sales, 6.6X assets, 21X equity with a 48% profitability, 1.6% yield. Our cashflow forecast is USD 30.6BN. At 1.6% with a 1.1X adjustment because of fast growth gives a target, USD4,198.
