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AMZN
Amazon, 40% sales growth
🎯 📚📈 ▶️ $3,530
12 month free cashflow +$7,180m ⬇️
August 2nd, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
AMZN sales growth in the 2Q was +40%, needless to say that’s higher than we expected. Services grew at +40% which is a continuation of the very strong growth, products accelerated to +40% also. We presume that the product sales growth is temporary, But we still increase our 12 month sales growth forecast from +25% to +27%, a total $408.6bn.
Cashflow
Cash flow was negative again in the 2Q, That’s the third quarter in a row of negative cash flow because the investment spending has been quite high. But the cash flow trend is rising and with our forecast sales growth plus average investment spending, we see the next 12 months free cash flow will rise close to a record, $28.2bn.
AMZN sales growth in the 2Q was +40%, needless to say that’s higher than we expected. Services grew at +40% which is a continuation of the very strong growth, products accelerated to +40% also. We presume that the product sales growth is temporary, But we still increase our 12 month sales growth forecast from +25% to +27%, a total $408.6bn.
Cashflow
Cash flow was negative again in the 2Q, That’s the third quarter in a row of negative cash flow because the investment spending has been quite high. But the cash flow trend is rising and with our forecast sales growth plus average investment spending, we see the next 12 months free cash flow will rise close to a record, $28.2bn.
Sales to grow 27%, free cash flow up, lower debt, still higher shares...
Balance sheet
In the balance sheet AMZN is in net debt, $38.5bn as of the 2Q. But this is a bit misleading because they put a lot of money into marketable securities which we do not count in the net cash. Based on our measure and with our forecast cash flow in the next 12 months the debt will reduce to $10.3bn.
Profit
Because of much higher sales growth the net profit doubled in the 2Q from a year ago. The cash cost ratio, net profit add depreciation minus sales as a percent of sales, is at 85%. The cost ratio has been on an improving trend, and we use 85% to forecast the next 12 months profit will more than double, $31.7bn.
Value
ANZN has a current market value of $1.58 trillion. That’s 3.8 7X our sales forecast, 5.5 7X the value of the total assets and 15X the equity with a profitability of 30%. Yield is forecast to be 0%. We use our 1.6% cashflow with no discount because of the fast sales growth to give a still higher target price of $3,530.
In the balance sheet AMZN is in net debt, $38.5bn as of the 2Q. But this is a bit misleading because they put a lot of money into marketable securities which we do not count in the net cash. Based on our measure and with our forecast cash flow in the next 12 months the debt will reduce to $10.3bn.
Profit
Because of much higher sales growth the net profit doubled in the 2Q from a year ago. The cash cost ratio, net profit add depreciation minus sales as a percent of sales, is at 85%. The cost ratio has been on an improving trend, and we use 85% to forecast the next 12 months profit will more than double, $31.7bn.
Value
ANZN has a current market value of $1.58 trillion. That’s 3.8 7X our sales forecast, 5.5 7X the value of the total assets and 15X the equity with a profitability of 30%. Yield is forecast to be 0%. We use our 1.6% cashflow with no discount because of the fast sales growth to give a still higher target price of $3,530.
