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CAGR 23.21% All values in USD Millions Sales Sales yoy growth % Earnings Earnings yoy growth % EPS EPS yoy growth % Dividends 2020 2019 2018 2017 2016 $ 386,064 $ 280,522 $ 232,887 $ 177,866 $ 135,987 37.62% 20.45% 30.93% 30.80% $ 21,331 $ 11,588 $ 10,073 $ 3,033 $ 2,371 84.08% 15.04% 232.11% 27.92% $ 42 $ 23 $20 $6 $5 81.95% 14.09% 227.64% 25.51% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 55.17% 53.55% Cash Flows Net Operating Cash Flow Operating Cash Flow Growth Net Investing Cash Flow Investing Cash Flow Growth Net Financing Cash Flow Financing Cash Flow Growth Free Cash Flow Free Cash Flow Growth 2020 2019 2018 2017 2016 $ 66,064 $ 38,514 $ 30,723 $ 18,365 $16,443 71.53% 25.36% 67.29% 11.69% 32.07% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 -145.50% -96.31% 54.33% -174.24% 43.27% $ 1,104.00 $ 10,066.00 $ 7,686.00 $ 9,928.00 $ 2,911.00 89.03% -30.97% -177.42% 441.05% -17.63% $ 25,924 $21,653 $ 17,296 $6,410 $ 9,706 19.72% 25.19% 169.83% -33.96% 21.71% CAGR Formula = (Future Value/Beginning Value)^(1)-1 CAGR 23.21% All values in USD Millions Sales Sales yoy growth % Earnings Earnings yoy growth % EPS EPS yoy growth % Dividends 2020 2019 2018 2017 2016 $ 386,064 $ 280,522 $ 232,887 $ 177,866 $ 135,987 37.62% 20.45% 30.93% 30.80% $ 21,331 $ 11,588 $ 10,073 $ 3,033 $ 2,371 84.08% 15.04% 232.11% 27.92% $ 42 $ 23 $20 $6 $5 81.95% 14.09% 227.64% 25.51% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 55.17% 53.55% Cash Flows Net Operating Cash Flow Operating Cash Flow Growth Net Investing Cash Flow Investing Cash Flow Growth Net Financing Cash Flow Financing Cash Flow Growth Free Cash Flow Free Cash Flow Growth 2020 2019 2018 2017 2016 $ 66,064 $ 38,514 $ 30,723 $ 18,365 $16,443 71.53% 25.36% 67.29% 11.69% 32.07% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 -145.50% -96.31% 54.33% -174.24% 43.27% $ 1,104.00 $ 10,066.00 $ 7,686.00 $ 9,928.00 $ 2,911.00 89.03% -30.97% -177.42% 441.05% -17.63% $ 25,924 $21,653 $ 17,296 $6,410 $ 9,706 19.72% 25.19% 169.83% -33.96% 21.71% CAGR Formula = (Future Value/Beginning Value)^(1)-1 CAGR 23.21% All values in USD Millions Sales Sales yoy growth % Earnings Earnings yoy growth % EPS EPS yoy growth % Dividends 2020 2019 2018 2017 2016 $ 386,064 $ 280,522 $ 232,887 $ 177,866 $ 135,987 37.62% 20.45% 30.93% 30.80% $ 21,331 $ 11,588 $ 10,073 $ 3,033 $ 2,371 84.08% 15.04% 232.11% 27.92% $ 42 $ 23 $20 $6 $5 81.95% 14.09% 227.64% 25.51% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 55.17% 53.55% Cash Flows Net Operating Cash Flow Operating Cash Flow Growth Net Investing Cash Flow Investing Cash Flow Growth Net Financing Cash Flow Financing Cash Flow Growth Free Cash Flow Free Cash Flow Growth 2020 2019 2018 2017 2016 $ 66,064 $ 38,514 $ 30,723 $ 18,365 $16,443 71.53% 25.36% 67.29% 11.69% 32.07% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 -145.50% -96.31% 54.33% -174.24% 43.27% $ 1,104.00 $ 10,066.00 $ 7,686.00 $ 9,928.00 $ 2,911.00 89.03% -30.97% -177.42% 441.05% -17.63% $ 25,924 $21,653 $ 17,296 $6,410 $ 9,706 19.72% 25.19% 169.83% -33.96% 21.71% CAGR Formula = (Future Value/Beginning Value)^(1)-1 1 All values in USD Millions 2020 2019 2018 2017 2016 CAGR 2 Sales 386064 280522 232887 177866 135987 3 Sales yoy growth =B2/C2-1 =C2/02-1 =D2/E2-1 =E2/F2-1 =(B2/F2)(1/5)-1 4 Earnings 21331 11588 10073 3033 2371 5 Earnings yoy growth % =B4/C4-1 =C4/04-1 =D4/E4-1 =E4/F4-1 =(B4/F4)^(1/5)-1 6 EPS 41.83 22.99 20.15 6.15 4.9 7 EPS yoy growth % -B6/C6-1 -C6/06-1 -D6/E6-1 -E6/F6-1 +(B6/F6)^(1/5)-1 8 Dividends 0 0 0 0 0 9 10 Cash Flows 2020 2019 2018 2017 2016 11 Net Operating Cash Flow 66064 38514 30723 18365 16443 12 Net Operating Cash Flow Growth =B11/C11-1 =C11/011-1 =D11/E11-1=E11/F11-1 =(B11/F11)^(1/5)-1 13 Net Investing Cash Flow -59611 -24281 -12369 -27084 -9876 14 Net Investing Cash Flow Growth --(B13/C13-1) --(C13/013-1) --(D13/E13-1) --(E13/F13-1) =(B13/F13)(1/5)-1 15 Net Financing Cash Flow -1104 -10066 -7686 9928 -2911 16 Net Financing Cash Flow Growth --(B15/C15-1) --(C15/015-1) =(015/E15-1) = (E15/F15-1) =(B15/F15) (1/5)-2 17 Free Cash Flow 25924 21653 17296 6410 9706 18 Free Cash Flow Growth =B17/C17-1 =C17/017-1 =D17/E17-1 =E17/F17-1 =(B17/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. Calculate the required return on investment for your company using various methods including CAPM approach. Calculate the fair value of your company and its expected return. Calculate the implied return for the company's K. Calculate alpha the risk adjusted excess return. State and explain your opinion as to whether or not you should buy or sell the company. CAGR 23.21% All values in USD Millions Sales Sales yoy growth % Earnings Earnings yoy growth % EPS EPS yoy growth % Dividends 2020 2019 2018 2017 2016 $ 386,064 $ 280,522 $ 232,887 $ 177,866 $ 135,987 37.62% 20.45% 30.93% 30.80% $ 21,331 $ 11,588 $ 10,073 $ 3,033 $ 2,371 84.08% 15.04% 232.11% 27.92% $ 42 $ 23 $20 $6 $5 81.95% 14.09% 227.64% 25.51% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 55.17% 53.55% Cash Flows Net Operating Cash Flow Operating Cash Flow Growth Net Investing Cash Flow Investing Cash Flow Growth Net Financing Cash Flow Financing Cash Flow Growth Free Cash Flow Free Cash Flow Growth 2020 2019 2018 2017 2016 $ 66,064 $ 38,514 $ 30,723 $ 18,365 $16,443 71.53% 25.36% 67.29% 11.69% 32.07% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 -145.50% -96.31% 54.33% -174.24% 43.27% $ 1,104.00 $ 10,066.00 $ 7,686.00 $ 9,928.00 $ 2,911.00 89.03% -30.97% -177.42% 441.05% -17.63% $ 25,924 $21,653 $ 17,296 $6,410 $ 9,706 19.72% 25.19% 169.83% -33.96% 21.71% CAGR Formula = (Future Value/Beginning Value)^(1)-1 CAGR 23.21% All values in USD Millions Sales Sales yoy growth % Earnings Earnings yoy growth % EPS EPS yoy growth % Dividends 2020 2019 2018 2017 2016 $ 386,064 $ 280,522 $ 232,887 $ 177,866 $ 135,987 37.62% 20.45% 30.93% 30.80% $ 21,331 $ 11,588 $ 10,073 $ 3,033 $ 2,371 84.08% 15.04% 232.11% 27.92% $ 42 $ 23 $20 $6 $5 81.95% 14.09% 227.64% 25.51% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 55.17% 53.55% Cash Flows Net Operating Cash Flow Operating Cash Flow Growth Net Investing Cash Flow Investing Cash Flow Growth Net Financing Cash Flow Financing Cash Flow Growth Free Cash Flow Free Cash Flow Growth 2020 2019 2018 2017 2016 $ 66,064 $ 38,514 $ 30,723 $ 18,365 $16,443 71.53% 25.36% 67.29% 11.69% 32.07% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 -145.50% -96.31% 54.33% -174.24% 43.27% $ 1,104.00 $ 10,066.00 $ 7,686.00 $ 9,928.00 $ 2,911.00 89.03% -30.97% -177.42% 441.05% -17.63% $ 25,924 $21,653 $ 17,296 $6,410 $ 9,706 19.72% 25.19% 169.83% -33.96% 21.71% CAGR Formula = (Future Value/Beginning Value)^(1)-1 CAGR 23.21% All values in USD Millions Sales Sales yoy growth % Earnings Earnings yoy growth % EPS EPS yoy growth % Dividends 2020 2019 2018 2017 2016 $ 386,064 $ 280,522 $ 232,887 $ 177,866 $ 135,987 37.62% 20.45% 30.93% 30.80% $ 21,331 $ 11,588 $ 10,073 $ 3,033 $ 2,371 84.08% 15.04% 232.11% 27.92% $ 42 $ 23 $20 $6 $5 81.95% 14.09% 227.64% 25.51% $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 55.17% 53.55% Cash Flows Net Operating Cash Flow Operating Cash Flow Growth Net Investing Cash Flow Investing Cash Flow Growth Net Financing Cash Flow Financing Cash Flow Growth Free Cash Flow Free Cash Flow Growth 2020 2019 2018 2017 2016 $ 66,064 $ 38,514 $ 30,723 $ 18,365 $16,443 71.53% 25.36% 67.29% 11.69% 32.07% $ 59,611.00 $ 24,281.00 $ 12,369.00 $ 27,084.00 $9,876.00 -145.50% -96.31% 54.33% -174.24% 43.27% $ 1,104.00 $ 10,066.00 $ 7,686.00 $ 9,928.00 $ 2,911.00 89.03% -30.97% -177.42% 441.05% -17.63% $ 25,924 $21,653 $ 17,296 $6,410 $ 9,706 19.72% 25.19% 169.83% -33.96% 21.71% CAGR Formula = (Future Value/Beginning Value)^(1)-1 1 All values in USD Millions 2020 2019 2018 2017 2016 CAGR 2 Sales 386064 280522 232887 177866 135987 3 Sales yoy growth =B2/C2-1 =C2/02-1 =D2/E2-1 =E2/F2-1 =(B2/F2)(1/5)-1 4 Earnings 21331 11588 10073 3033 2371 5 Earnings yoy growth % =B4/C4-1 =C4/04-1 =D4/E4-1 =E4/F4-1 =(B4/F4)^(1/5)-1 6 EPS 41.83 22.99 20.15 6.15 4.9 7 EPS yoy growth % -B6/C6-1 -C6/06-1 -D6/E6-1 -E6/F6-1 +(B6/F6)^(1/5)-1 8 Dividends 0 0 0 0 0 9 10 Cash Flows 2020 2019 2018 2017 2016 11 Net Operating Cash Flow 66064 38514 30723 18365 16443 12 Net Operating Cash Flow Growth =B11/C11-1 =C11/011-1 =D11/E11-1=E11/F11-1 =(B11/F11)^(1/5)-1 13 Net Investing Cash Flow -59611 -24281 -12369 -27084 -9876 14 Net Investing Cash Flow Growth --(B13/C13-1) --(C13/013-1) --(D13/E13-1) --(E13/F13-1) =(B13/F13)(1/5)-1 15 Net Financing Cash Flow -1104 -10066 -7686 9928 -2911 16 Net Financing Cash Flow Growth --(B15/C15-1) --(C15/015-1) =(015/E15-1) = (E15/F15-1) =(B15/F15) (1/5)-2 17 Free Cash Flow 25924 21653 17296 6410 9706 18 Free Cash Flow Growth =B17/C17-1 =C17/017-1 =D17/E17-1 =E17/F17-1 =(B17/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. Calculate the required return on investment for your company using various methods including CAPM approach. Calculate the fair value of your company and its expected return. Calculate the implied return for the company's K. Calculate alpha the risk adjusted excess return. State and explain your opinion as to whether or not you should buy or sell the company