Taking a look at the most recent 8-K, we can gather a surface opinion on the company. Fourth quarter sales were up 22% to $43.7 billion. Operating cash flow increased 38% to $16.4 billion for the trailing twelve months, compared with $11.9 billion for the trailing twelve months ended December 31, 2015. Operating income increased 13% to $1.3 billion in the fourth quarter, compared with operating income of $1.1 billion in fourth quarter 2015. These numbers show that the company is still gaining market space and continues to be one of the top companies in the online retail space.
Taking a look at the chart using the monthly time frame, we can see that price has essentially done nothing but increase over the years. A stock like this is great because the company is well run and in a successful market. Certainly the price of the stock is high compared to most, but it could be justified. You have to compare the fundamental numbers as well as the technical to determine if this is a well rounded stock.
Typically, a company's
financial statements are the reports that show the
financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Amazon income statement, its balance sheet, and the statement of cash flows. Potential Amazon investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Amazon investors may use each financial statement separately, they are all related. The changes in Amazon's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Amazon's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our
technical analysis and
fundamental analysis pages.
The goal of Amazon
fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Amazon performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Amazon shares is the value that is considered the true value of the share. If
the intrinsic value of Amazon is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Amazon. Please read more on our
fundamental analysis page.
How effective is Amazon in utilizing its assets?
Amazon Inc reports assets on its Balance Sheet. It represents the amount of Amazon resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Amazon aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Internet & Direct Marketing Retail space. To get a better handle on how balance sheet or income statements item affect Amazon volatility, please check the breakdown of all its
fundamentals.
Are Amazon Earnings Expected to grow?
The
future earnings power of Amazon involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Amazon factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Amazon
stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Amazon
expected earnings.
Amazon Gross Profit
Amazon Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Amazon previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Amazon Gross Profit growth over the last 10 years. Please check Amazon's
gross profit and other
fundamental indicators for more details.
Breaking down Amazon Indicators
Risks
For a full list of risks, take a look at the most recent 10-K report as this will give you a list and details. In the mean time, here are a few to use in your research. First, competition is only going to increase as people begin shifting to online retail. If the company begins to slack, they will certainly lose market space in this highly competitive market. Secondly, they have to keep up with quality of service because if they begin to slack, it’s just as easy for people to switch over to a competitor that is providing the same service with better quality. This market has intense competition and the company has to say on its toes.
Conclusion
Amazon is a great company that continues to prove that they have what it takes to be the top dog in the online retail space. Many companies look up to them and strive to be at that level. Be sure to complete your own research to determine if this company is a fit for you. If you still have questions, consult an investing professional and they can point you in the right direction.
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Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
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