Calculate the fair value of AMAZON and its expected return.

? ? ? ? ? ? ? ?Calculate the implied return for the AMAZON stock.

? ? ? ? ? ? ? ?Calculate alpha the risk adjusted excess return. ?

State and explain your opinion as to whether or not you should buy or sell the company.

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Amazon is a conglomerate technology company focusing on e-commerce, digital streaming, cloud computing, and artificial intelligence. The current share value of Amazon is $2,525 per share, and the analysis predicts the target into a median target of $2,730 per share with a high estimate of $3,300 and a low profile share value of $1,840. Company Background 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 All values in USD Millions Sales Sales yoy growth % Earnings Earnings you growth % EPS EPS yoy growth % Dividends Cash Flows Net Operating Cash Flow Net Operating Cash Flow Growth Net Investing Cash Flow Net Investing Cash Flow Growth Net Financing Cash Flow 16 Net Financing Cash Flow Growth Free Cash Flow 17 18 Free Cash Flow Growth 2020 386064 =B2/C2-1 21331 -B4/C4-1 41.83 =B6/C6-1 0 2019 280522 =C2/D2-1 11588 2020 66064 =C4/D4-1 22.99 =C6/D6-1 0 2018 232887 =D2/E2-1 10073 =D4/E4-1 20.15 =D6/E6-1 0 2017 177866 =E2/F2-1 3033 -E4/F4-1 6.15 =E6/F6-1 0 2017 18365 2019 38514 =C11/D11-1 -24281 2018 30723 =D11/E11-1 -12369 =B11/C11-1 =E11/F11-1 -27084 9928 -59611 =(B13/C13-1) =-(C13/D13-1) =-(D13/E13-1) =-(E13/F13-1) -1104 -10066 -7686 =(B15/C15-1) =-(C15/D15-1) =(D15/E15-1) =-(E15/F15-1) 25924 21653 17296 6410 -817/C17-1 -C17/D17-1 -D17/E17-1 -E17/F17-1 2016 135987 2371 4.9 0 2016 16443 -9876 -2911 9706 =(B2/F2)^(1/5)-1 =(B4/F4)^(1/5)-1 =(B6/F6)^(1/5)-1 CAGR -(B11/F11)^(1/5)-1 =(B13/F13)^(1/5)-1 ={B15/F15)^(1/5)-1 -(817/F17)^(1/5)-1 Conclusion 1. Looking at the sales data, the sales data has shown tremendous growth over the past 5 years growing at a CAGR of over 23%. 2. Sames goes with Earnings and EPS as well which have grown at a CAGR of over 50%. This indicates strong fundamentals of the giant. 3. The company has not declared dividends over many many years because Amazon is reinvesting the cash flows into the business. So, Amazon isn't ideal for those investors who seek regular income. 4. Talking about the cash flows, so, all the cash flows have shown positive CAGR except the Financing Cash Flow. Though the Financing cash flow has shown negative CAGR the latest cash flow is positive. 5. The company also has plenty of free cash flows which it can use the repay the debt or invest in Capex or pay dividends. So, that is a very huge plus point. 4 6 9 10 11 12 13 Cash Flows Net Operating Cash Flow Net Operating Cash Flow Growth Net Investing Cash Flow 14 Net Investing Cash Flow Growth 15 Net Financing Cash Flow All values in USD Millions Sales Sales you growth % Earnings Earnings you growth % EPS EPS you growth % Dividends 16 Net Financing Cash Flow Growth 17 Free Cash Flow Free Cash Flow Growth 18 19 20 21 22 23 24 25 2020 $386,064 37.62% $21,331 84.08% $42 81.95% $ 0.00 2019 $280,522 20.45% $11,588 15.04% $23 14.09% $0.00 2018 $232,887 30.93% $ 10,073 232.11% $ 20 227.64% $ 0.00 2018 $ 30,723 67.29% 2017 2016 $177,866 $135,987 30.80% $2,371 $5 $ 0.00 2020 2019 $ 38,514 $ 66,064 71.53% 25.36% 11.69% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 $ 3,033 27.92% $6 25.51% $ 0.00 $ 17,296 169.83% 2017 $ 18,365 -145.50% -96.31% 54.33% -174.24% $1,104.00 $10,066.00 $7,686.00 $9,928.00 $2,911.00 89.03% -30.97% -177.42% 441.05% $25,924 $ 21,653 19.72% 25.19% $ 6,410 -33.96% 2016 $16,443 CAGR Formula = (Future Value/Beginning Value)^(1/n)-1 $9,706 CAGR 23.21% 55.17% 53.55% 32.07% 43.27% -17.63% 21.71%