Amazon Continues to Be the Leader of the Online Market Space

As the online retail is shaping up to be the dominant arena, Amazon has already stated they are the king of the current market place and continue to dominate as others play catch up. Amazon could be compared to Apple as the leader in online sales. What makes this company so great is they sell anything and everything you’d need from many different vendors. Prices are also very competitive, which motivates the consumer to keep coming back. However, they will have to keep innovating if they want to be the market leader in the coming years.

Published over a year ago
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Reviewed by Ellen Johnson

These numbers are from the company’s 8-K SEC filing. The company announced fourth quarter sales as being 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. For the fourth quarter, net income was $749 million or $1.54 per diluted share, compared with net income of $482 million, or $1.00 per diluted share in the fourth quarter of 2015. These are solid numbers and prove that the company knows what they are doing in the space.

Now, taking a look at the chart using the monthly time frame, we can see that price has done nothing but increase from virtually its inception to the market. These types of companies are the dreams people have about investing at twenty dollars and riding the train up to eight hundred and beyond. However, the chart alone isn’t enough to invest in the company. You have to use all the data in front of you to formulate a well rounded opinion to give you the best chance at profitability.

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 complete list of risks, take a look at the company’s most recent 10-K report as that will cover the risks and details. For now, here are a couple to keep in mind. First, they have to keep innovation a priority because all it takes is one good idea to have another company surpass them in the market place. Secondly, as technology changes, the company has to keep on top of the latest and greatest because if they begin to fall short, they will lose customers and their brand image could suffer. Once brand image begins suffering, it can take awhile for it to be restored.

Conclusion

Amazon is the leader and for good reason in this particular space. Certainly the company does will and continues to grow, but that isn’t enough to justify investing in the stock. BE sure to compare them against other companies and see if they provide the best value. If you still have questions, be sure to reach out to an investing professional and they can help point you in the right direction.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Amazon Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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