Amazon.com Inc Valuation – March 2019 #AMZN

Company Profile (excerpt from Reuters): Amazon.com, Inc., incorporated on May 28, 1996, offers a range of products and services through its Websites. The Company operates through three segments: North America, International and Amazon Web Services (AWS). The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices. The Company, through its subsidiary, Whole Foods Market, Inc., offers healthy and organic food and staples across its stores. The Company also offers a range of products like whole trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic gala and fuji apples, organic rotisserie chicken.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMZN – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $870,058,004,269 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.10 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 1163.52% Pass
6. Moderate PEmg Ratio PEmg < 20 121.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 20.33 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.10 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $14.62
MG Growth Estimate 15.00%
MG Value $562.90
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $212.00
MG Value based on 0% Growth $124.28
Market Implied Growth Rate 56.29%
Current Price $1,770.35
% of Intrinsic Value 314.51%

Amazon.com, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.48 in 2015 to an estimated $14.62 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 56.29% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amazon.com, Inc. revealed the company was trading above its Graham Number of $208.82. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 121.09, which was above the industry average of 27.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-88.

Amazon.com, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$88.00
Graham Number $208.82
PEmg 121.09
Current Ratio 1.10
PB Ratio 20.33
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $75,101,000,000
Total Current Liabilities $68,391,000,000
Long-Term Debt $23,495,000,000
Total Assets $162,648,000,000
Intangible Assets $18,658,000,000
Total Liabilities $119,099,000,000
Shares Outstanding (Diluted Average) 500,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $21.85
Dec2018 $20.14
Dec2017 $6.15
Dec2016 $4.90
Dec2015 $1.25
Dec2014 -$0.52
Dec2013 $0.59
Dec2012 -$0.09
Dec2011 $1.37
Dec2010 $2.53
Dec2009 $2.04
Dec2008 $1.49
Dec2007 $1.12
Dec2006 $0.45
Dec2005 $0.84
Dec2004 $1.39
Dec2003 $0.08
Dec2002 -$0.39
Dec2001 -$1.56
Dec2000 -$4.02
Dec1999 -$2.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $14.62
Dec2018 $9.47
Dec2017 $3.58
Dec2016 $1.94
Dec2015 $0.48
Dec2014 $0.32
Dec2013 $0.92
Dec2012 $1.21
Dec2011 $1.81
Dec2010 $1.86
Dec2009 $1.42
Dec2008 $1.09
Dec2007 $0.85
Dec2006 $0.64
Dec2005 $0.51
Dec2004 -$0.07
Dec2003 -$1.07

Recommended Reading:

Other ModernGraham posts about the company

Amazon.com Inc Valuation – June 2018 $AMZN
Amazon.com Inc Valuation – August 2017 $AMZN
Amazon Inc Valuation – July 2016 $AMZN
58 Companies in the Spotlight This Week – 1/31/15
Amazon.com Inc. Annual Valuation – 2015 $AMZN

Other ModernGraham posts about related companies

Dollar Tree Inc Valuation – March 2019 #DLTR
TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Autozone Inc Valuation – January 2019 $AZO

Company Profile (excerpt from Reuters): AutoZone, Inc., incorporated on November 25, 1991, is a retailer and distributor of automotive replacement parts and accessories in the United States. The Company operates through the Auto Parts Locations segment. The Auto Parts Locations segment is a retailer and distributor of automotive parts and accessories. As of February 10, 2018, the Company operated through 6,088 locations in the United States, Puerto Rico, Mexico and Brazil. The Company’s stores carry product lines for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. The Company’s domestic stores also have a commercial sales program, which provides commercial credit and delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. The Company’s other operating segments include ALLDATA, which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry; E-commerce, which includes direct sales to customers through www.autozone.com.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AZO – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $21,130,360,376 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 210.15% Pass
6. Moderate PEmg Ratio PEmg < 20 94.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.15 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -40.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.83
MG Growth Estimate 15.00%
MG Value $339.80
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $127.98
MG Value based on 0% Growth $75.02
Market Implied Growth Rate 43.24%
Current Price $838.34
% of Intrinsic Value 246.71%

AutoZone, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.13 in 2014 to an estimated $8.83 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 43.24% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into AutoZone, Inc. revealed the company was trading above its Graham Number of $151.94. The company pays a dividend of $5.68 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 94.99, which was above the industry average of 20.05. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-56.29.

AutoZone, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$56.29
Graham Number $151.94
PEmg 94.99
Current Ratio 0.72
PB Ratio 11.15
Current Dividend $5.68
Dividend Yield 0.68%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $478,342,000
Total Current Liabilities $664,357,000
Long-Term Debt $7,533,228,000
Total Assets $18,662,119,000
Intangible Assets $0
Total Liabilities $8,264,721,000
Shares Outstanding (Diluted Average) 138,323,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.64
Dec2017 $6.35
Dec2016 $7.52
Dec2015 $5.51
Dec2014 $5.21
Dec2013 $2.78
Dec2012 $4.32
Dec2011 $4.87
Dec2010 $2.07
Dec2009 $1.93
Dec2008 $5.17
Dec2007 $4.38
Dec2006 $3.42
Dec2005 $4.05
Dec2004 $2.92
Dec2003 $3.73
Dec2002 $2.23
Dec2001 $3.02
Dec2000 $2.53
Dec1999 $2.03
Dec1998 $1.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.83
Dec2017 $6.10
Dec2016 $5.68
Dec2015 $4.68
Dec2014 $4.13
Dec2013 $3.46
Dec2012 $3.75
Dec2011 $3.54
Dec2010 $3.05
Dec2009 $3.62
Dec2008 $4.31
Dec2007 $3.82
Dec2006 $3.45
Dec2005 $3.37
Dec2004 $2.99
Dec2003 $2.91
Dec2002 $2.45

Recommended Reading:

Other ModernGraham posts about the company

AutoZone Inc Valuation – February 2018 $AZO
Autozone Inc Valuation – June 2016 $AZO
AutoZone Inc. Annual Valuation – 2015 $AZO

Other ModernGraham posts about related companies

Linamar Corp Valuation – October 2018 $TSE-LNR
AutoNation Inc Valuation – September 2018 $AN
Superior Industries International Inc Valuation – August 2018 $SUP
Lydall Inc Valuation – August 2018 $LDL
Lithia Motors Inc Valuation – August 2018 $LAD
Carlisle Companies Inc Valuation – August 2018 $CSL
Delphi Technologies PLC Valuation – August 2018 $DLPH
Cooper-Standard Holdings Inc Valuation – August 2018 $CPS
Copart Inc Valuation – August 2018 $CPRT
Standard Motor Products Inc Valuation – August 2018 $SMP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amazon.com Inc Valuation – June 2018 $AMZN

Company Profile (excerpt from Reuters): Amazon.com, Inc., incorporated on May 28, 1996, offers a range of products and services through its Websites. The Company operates through three segments: North America, International and Amazon Web Services (AWS). The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices. The Company, through its subsidiary, Whole Foods Market, Inc., offers healthy and organic food and staples across its stores. The Company also offers a range of products like whole trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic gala and fuji apples, organic rotisserie chicken.

AMZN Chart

AMZN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMZN – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $817,117,294,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.06 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 227.44% Pass
6. Moderate PEmg Ratio PEmg < 20 303.31 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 26.65 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.06 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.85 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.55
MG Growth Estimate 15.00%
MG Value $213.75
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $80.50
MG Value based on 0% Growth $47.19
Market Implied Growth Rate 147.41%
Current Price $1,683.99
% of Intrinsic Value 787.82%

Amazon.com, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.32 in 2014 to an estimated $5.55 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 147.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amazon.com, Inc. revealed the company was trading above its Graham Number of $104.02. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 303.31, which was above the industry average of 37.1. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-88.49.

Amazon.com, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$88.49
Graham Number $104.02
PEmg 303.31
Current Ratio 1.06
PB Ratio 26.65
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $50,829,000,000
Total Current Liabilities $48,045,000,000
Long-Term Debt $24,640,000,000
Total Assets $126,362,000,000
Intangible Assets $13,388,000,000
Total Liabilities $94,899,000,000
Shares Outstanding (Diluted Average) 498,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.40
Dec2017 $6.15
Dec2016 $4.90
Dec2015 $1.25
Dec2014 -$0.52
Dec2013 $0.59
Dec2012 -$0.09
Dec2011 $1.37
Dec2010 $2.53
Dec2009 $2.04
Dec2008 $1.49
Dec2007 $1.12
Dec2006 $0.45
Dec2005 $0.84
Dec2004 $1.39
Dec2003 $0.08
Dec2002 -$0.39
Dec2001 -$1.56
Dec2000 -$4.02
Dec1999 -$2.20
Dec1998 -$0.42

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.55
Dec2017 $3.58
Dec2016 $1.94
Dec2015 $0.48
Dec2014 $0.32
Dec2013 $0.92
Dec2012 $1.21
Dec2011 $1.81
Dec2010 $1.86
Dec2009 $1.42
Dec2008 $1.09
Dec2007 $0.85
Dec2006 $0.64
Dec2005 $0.51
Dec2004 -$0.07
Dec2003 -$1.07
Dec2002 -$1.67

Recommended Reading:

Other ModernGraham posts about the company

Amazon.com Inc Valuation – August 2017 $AMZN
Amazon Inc Valuation – July 2016 $AMZN
58 Companies in the Spotlight This Week – 1/31/15
Amazon.com Inc. Annual Valuation – 2015 $AMZN
A Comparison of Four Listed Companies ($AMZN, $INTC, $NFLX, and $WFC) (MG Book Club Chapter 13)

Other ModernGraham posts about related companies

JC Penney Company Valuation – June 2018 $JCP
Shoe Carnival Inc Valuation – June 2018 $SCVL
Aaron’s Inc Valuation – June 2018 $AAN
GameStop Corp Valuation – June 2018 $GME
Urban Outfitters Inc Valuation – June 2018 $URBN
Ulta Beauty Inc Valuation – June 2018 $ULTA
Kohl’s Corporation Valuation – June 2018 $KSS
Dollar Tree Inc Valuation – May 2018 $DLTR
TJX Companies Inc Valuation – May 2018 $TJX
Tractor Supply Co Valuation – April 2018 $TSCO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

AutoZone Inc Valuation – February 2018 $AZO

Company Profile (obtained from Marketwatch): AutoZone, Inc. engages in the provision of retail and a distribution of automotive replacement parts and accessories. It operates through Auto Parts Locations, and Other segments. The Auto Parts Locations segment is provides automotive parts and accessories through the company’s stores in the United States, Puerto Rico, Mexico, and Brazil. The Other segment includes ALLDATA, which produces, sells, and maintains diagnostic and repair information software used in the automotive repair industry. The company was founded by Joseph R. Hyde, III on July 4, 1979 and is headquartered in Memphis, TN.

Downloadable PDF version of this valuation:

ModernGraham Valuation of AZO – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,182,097,324 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.98 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 169.66% Pass
6. Moderate PEmg Ratio PEmg < 20 16.60 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -13.93 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.98 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -41.71 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $40.04
MG Growth Estimate 7.90%
MG Value $973.47
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $580.64
MG Value based on 0% Growth $340.37
Market Implied Growth Rate 4.05%
Current Price $664.72
% of Intrinsic Value 68.28%

AutoZone, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $26.22 in 2014 to an estimated $40.04 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.05% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into AutoZone, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 16.6, which was below the industry average of 18.18, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-211.89.

AutoZone, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$211.89
Graham Number $0.00
PEmg 16.60
Current Ratio 0.98
PB Ratio -13.93
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2018
Total Current Assets $4,826,307,000
Total Current Liabilities $4,947,228,000
Long-Term Debt $5,043,541,000
Total Assets $9,403,719,000
Intangible Assets $0
Total Liabilities $10,734,266,000
Shares Outstanding (Diluted Average) 27,882,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $39.73
Aug2017 $44.07
Aug2016 $40.70
Aug2015 $36.03
Aug2014 $31.57
Aug2013 $27.79
Aug2012 $23.48
Aug2011 $19.47
Aug2010 $14.97
Aug2009 $11.73
Aug2008 $10.04
Aug2007 $8.53
Aug2006 $7.50
Aug2005 $7.18
Aug2004 $6.56
Aug2003 $5.34
Aug2002 $4.00
Aug2001 $1.54
Aug2000 $2.00
Aug1999 $1.63
Aug1998 $1.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $40.04
Aug2017 $38.81
Aug2016 $34.76
Aug2015 $30.42
Aug2014 $26.22
Aug2013 $22.20
Aug2012 $18.25
Aug2011 $14.74
Aug2010 $11.76
Aug2009 $9.77
Aug2008 $8.52
Aug2007 $7.51
Aug2006 $6.71
Aug2005 $5.85
Aug2004 $4.75
Aug2003 $3.53
Aug2002 $2.46

Recommended Reading:

Other ModernGraham posts about the company

Autozone Inc Valuation – June 2016 $AZO
AutoZone Inc. Annual Valuation – 2015 $AZO

Other ModernGraham posts about related companies

Thor Industries Inc Valuation – Initial Coverage $THO
Titan International Inc Valuation – Initial Coverage $TWI
Harley-Davidson Inc Valuation – August 2017 $HOG
Wabash National Corp Valuation – Initial Coverage $WNC
Advance Auto Parts Inc Valuation – August 2017 $AAP
Fox Factory Holding Corp Valuation – Initial Coverage $FOXF
Monro Muffler Brake Inc Valuation – Initial Coverage $MNRO
Group 1 Automotive Inc Valuation – Initial Coverage $GPI
Dana Inc Valuation – Initial Coverage $DAN
Linamar Corp Valuation – Initial Coverage $TSE:LNR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amazon.com Inc Valuation – August 2017 $AMZN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Undervalued Stocks for the Enterprising Investor – August 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amazon.com Inc (AMZN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amazon.com, Inc. offers a range of products and services through its Websites. The Company operates through three segments: North America, International and Amazon Web Services (AWS). The North America segment consists of retail sales of consumer products (including from sellers) and subscriptions through North America-focused Websites, such as www.amazon.com, www.amazon.ca and www.amazon.com.mx. The International segment primarily consists of retail sales of consumer products (including from sellers) and subscriptions through internationally-focused Websites, such as www.amazon.com.au, www.amazon.nl, www.amazon.es and www.amazon.co.uk. The AWS segment consists of sales of compute, storage, database, and other service offerings for start-ups, enterprises, government agencies and academic institutions. The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It manufactures and sells electronic devices.

AMZN Chart

AMZN data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMZN – August 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $457,940,923,915 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.01 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 93.23% Pass
6. Moderate PEmg Ratio PEmg < 20 282.04 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 20.20 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.01 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 15.78 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.38
MG Growth Estimate 15.00%
MG Value $130.13
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $49.01
MG Value based on 0% Growth $28.73
Market Implied Growth Rate 136.77%
Current Price $953.29
% of Intrinsic Value 732.57%

Amazon.com, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the  low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years, and the lack of dividends.  As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.92 in 2013 to an estimated $3.38 for 2017.  This level of demonstrated earnings growth does not support the market’s implied estimate of 136.77% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amazon.com, Inc. revealed the company was trading above its Graham Number of $71.12.  The company does not pay a dividend.  Its PEmg (price over earnings per share – ModernGraham) was 282.04, which was above the industry average of 48.5.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-47.89.

Amazon.com, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.89
Graham Number $71.12
PEmg 282.04
Current Ratio 1.01
PB Ratio 20.20
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2017
Total Current Assets $41,007,000,000
Total Current Liabilities $40,520,000,000
Long-Term Debt $7,683,000,000
Total Assets $87,781,000,000
Intangible Assets $4,254,000,000
Total Liabilities $64,567,000,000
Shares Outstanding (Diluted Average) 492,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.56
Dec2016 $4.90
Dec2015 $1.25
Dec2014 -$0.52
Dec2013 $0.59
Dec2012 -$0.09
Dec2011 $1.37
Dec2010 $2.53
Dec2009 $2.04
Dec2008 $1.49
Dec2007 $1.12
Dec2006 $0.45
Dec2005 $0.84
Dec2004 $1.39
Dec2003 $0.08
Dec2002 -$0.39
Dec2001 -$1.56
Dec2000 -$4.02
Dec1999 -$2.20
Dec1998 -$0.42
Dec1997 -$0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.38
Dec2016 $1.94
Dec2015 $0.48
Dec2014 $0.32
Dec2013 $0.92
Dec2012 $1.21
Dec2011 $1.81
Dec2010 $1.86
Dec2009 $1.42
Dec2008 $1.09
Dec2007 $0.85
Dec2006 $0.64
Dec2005 $0.51
Dec2004 -$0.07
Dec2003 -$1.07
Dec2002 -$1.67
Dec2001 -$2.10

Recommended Reading:

Other ModernGraham posts about the company

58 Companies in the Spotlight This Week – 1/31/15
Amazon.com Inc. Annual Valuation – 2015 $AMZN
A Comparison of Four Listed Companies ($AMZN, $INTC, $NFLX, and $WFC) (MG Book Club Chapter 13)
14 Companies in the Spotlight This Week – 1/11/14
ModernGraham Valuation: Amazon Inc. (AMZN)

Other ModernGraham posts about related companies

Fossil Group Inc Valuation – March 2017 $FOSL
Lumber Liquidators Holdings Inc Valuation – Initial Coverage $LL
CVS Health Corp Valuation – March 2017 $CVS
Target Corp Valuation – March 2017 $TGT
Foot Locker Inc Valuation – Initial Coverage $FL
Ulta Beauty Inc Valuation – Initial Coverage $ULTA
Kohl’s Corporation Valuation – March 2017 $KSS
Stamps.com Inc Valuation – Initial Coverage $STMP
Kirkland’s Inc Valuation – Initial Coverage $KIRK
Dollar Tree Inc Valuation – February 2017 $DLTR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amazon Inc Valuation – July 2016 $AMZN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amazon Inc (AMZN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amazon.com, Inc. offers a range of products and services through its Websites. The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. The Company has three segments: North America, International and Amazon Web Services (AWS). The Company’s North America segment focuses on retail sales of consumer products from sellers and subscriptions, through its North America-focused Websites, such as www.amazon.com, www.amazon.ca and www.amazon.com.mx. The Company’s International segment includes export sales from its internationally focused Websites, including export sales from its sites to customers in the United States, Mexico and Canada. The Company’s AWS segment focuses on the sales of compute, storage, database and other AWS service offerings for start-ups, enterprises, government agencies and academic institutions. The Company offers Amazon Prime, which is an annual membership program.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMZN – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $344,304,591,741 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.08 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -39.14% Fail
6. Moderate PEmg Ratio PEmg < 20 733.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 23.97 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.53 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

AMZN value chart July 2016

EPSmg $1.00
MG Growth Estimate -2.61%
MG Value $3.29
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $14.53
MG Value based on 0% Growth $8.52
Market Implied Growth Rate 362.74%
Current Price $735.44
% of Intrinsic Value 22320.41%

Amazon.com, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.21 in 2012 to an estimated $1 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 362.74% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Amazon.com, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

AMZN charts July 2016

Net Current Asset Value (NCAV) -$32.97
Graham Number $38.43
PEmg 733.97
Current Ratio 1.08
PB Ratio 23.97
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $30,513,000,000
Total Current Liabilities $28,187,000,000
Long-Term Debt $8,219,000,000
Total Assets $61,128,000,000
Intangible Assets $3,785,000,000
Total Liabilities $46,372,000,000
Shares Outstanding (Diluted Average) 481,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.10
Dec2015 $1.25
Dec2014 -$0.52
Dec2013 $0.59
Dec2012 -$0.09
Dec2011 $1.37
Dec2010 $2.53
Dec2009 $2.04
Dec2008 $1.49
Dec2007 $1.12
Dec2006 $0.45
Dec2005 $0.84
Dec2004 $1.39
Dec2003 $0.08
Dec2002 -$0.39
Dec2001 -$1.56
Dec2000 -$4.02
Dec1999 -$2.20
Dec1998 -$0.42
Dec1997 -$0.11
Dec1996 -$0.03

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.00
Dec2015 $0.48
Dec2014 $0.32
Dec2013 $0.92
Dec2012 $1.21
Dec2011 $1.81
Dec2010 $1.86
Dec2009 $1.42
Dec2008 $1.09
Dec2007 $0.85
Dec2006 $0.64
Dec2005 $0.51
Dec2004 -$0.07
Dec2003 -$1.07
Dec2002 -$1.67
Dec2001 -$2.10
Dec2000 -$2.03

Recommended Reading:

Other ModernGraham posts about the company

58 Companies in the Spotlight This Week – 1/31/15
Amazon.com Inc. Annual Valuation – 2015 $AMZN
A Comparison of Four Listed Companies ($AMZN, $INTC, $NFLX, and $WFC) (MG Book Club Chapter 13)
14 Companies in the Spotlight This Week – 1/11/14
ModernGraham Valuation: Amazon Inc. (AMZN)

Other ModernGraham posts about related companies

Walgreens Boots Alliance Inc Valuation – July 2016 $WBA
McKesson Corp Valuation – July 2016 $MCK
Ross Stores Inc Valuation – June 2016 $ROST
Bed Bath & Beyond Inc Valuation – June 2016 $BBBY
Wal-Mart Stores Inc Valuation – May 2016 $WMT
Aaron’s Inc Valuation – May 2016 $AAN
Nordstrom Inc Valuation – May 2016 $JWN
Tractor Supply Company Valuation – May 2016 $TSCO
Fossil Group Inc Stock Valuation – February 2016 $FOSL
TJX Companies Inc Valuation – February 2016 Update $TJX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Autozone Inc Valuation – June 2016 $AZO

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Autozone Inc (AZO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): AutoZone, Inc. is a retailer and distributor of automotive replacement parts and accessories in the United States. The Company’s operating segments include Auto Parts Locations and Other. The Auto Parts Locations segment comprises Domestic Auto Parts, Mexico, Brazil and Interamerican Motor Corporation (IMC). The Other segment reflects business activities of three businesses: ALLDATA, E-commerce and AutoAnything. As of August 29, 2015, the Company operated approximately 5,140 AutoZone stores in the United States, including Puerto Rico; over 440 stores in Mexico; approximately seven stores in Brazil, and over 20 IMC branches. The Company’s store carries a product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. As of August 29, 2015, in approximately 4,140 of its domestic AutoZone stores, the Company also provides a commercial sales program.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of AZO – June 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,502,986,801 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.91 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 256.80% Pass
6. Moderate PEmg Ratio PEmg < 20 21.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -12.31 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.91 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.74 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

AZO value chart June 2016

EPSmg $34.70
MG Growth Estimate 13.52%
MG Value $1,233.34
Opinion Undervalued
MG Grade D+
MG Value based on 3% Growth $503.09
MG Value based on 0% Growth $294.92
Market Implied Growth Rate 6.62%
Current Price $754.15
% of Intrinsic Value 61.15%

AutoZone, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $18.25 in 2012 to an estimated $34.70 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.62% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

AutoZone, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

[/not-level-free]

AZO charts June 2016

Net Current Asset Value (NCAV) -$200.69
Graham Number $0.00
PEmg 21.74
Current Ratio 0.91
PB Ratio -12.31
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 5/1/2016
Total Current Assets $4,225,486,000
Total Current Liabilities $4,647,589,000
Long-term Debt $4,953,697,000
Total Assets $8,464,105,000
Intangible Assets $0
Total Liabilities $10,327,387,000
Shares Outstanding (Diluted Average) 30,405,000

Earnings Per Share History

Next Fiscal Year Estimate $40.51
2015-08 $36.03
2014-08 $31.57
2013-08 $27.79
2012-08 $23.48
2011-08 $19.47
2010-08 $14.97
2009-08 $11.73
2008-08 $10.04
2007-08 $8.53
2006-08 $7.50
2005-08 $7.18
2004-08 $6.56
2003-08 $5.34
2002-08 $4.00
2001-08 $1.54
2000-08 $2.00
1999-08 $1.63
1998-08 $1.48
1997-08 $1.28
1996-08 $1.11

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $34.70
2015-08 $30.42
2014-08 $26.22
2013-08 $22.20
2012-08 $18.25
2011-08 $14.74
2010-08 $11.76
2009-08 $9.77
2008-08 $8.52
2007-08 $7.51
2006-08 $6.71
2005-08 $5.85
2004-08 $4.75
2003-08 $3.53
2002-08 $2.46
2001-08 $1.66
2000-08 $1.64

Recommended Reading:

Other ModernGraham posts about the company

AutoZone Inc. Annual Valuation – 2015 $AZO

Other ModernGraham posts about related companies

BorgWarner Inc Valuation – February 2016 Update $BWA
Genuine Parts Co Valuation – January 2016 Update $GPC
Ford Motor Company Valuation – January 2016 Update $F
Genuine Parts Co Valuation – January 2016 Update $GPC
Ford Motor Company Valuation – January 2016 Update $F
Harley-Davidson Inc Valuation – January 2016 Update $HOG
AutoNation Inc Valuation – November 2015 Update $AN
BorgWarner Inc. Valuation – November 2015 Update $BWA
The Best Companies of the Auto Industry – October 2015
Harley-Davidson Inc. Analysis – October 2015 Update $HOG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amazon.com Inc. Annual Valuation – 2015 $AMZN

220px-Amazon.com-Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Amazon.com Inc. (AMZN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amazon.com, Inc. (Amazon.com) is an e-commerce company. The Company sells a range of products and services through its various owned and affiliated Websites. The Company’s products, offered through its consumer-facing Websites, includes merchandise and content that the Company purchase for resale from vendors and those offered by third-party sellers. The Company also manufactures and sells electronic devices. The Company offers services, such as Amazon Web Service (AWS), publishing, digital content subscriptions, advertising, and co-branded credit cards. The Company serves through the lowest prices possible on everyday product pricing and shipping offers, including membership in Amazon Prime. The Company designs its Websites to enable millions of products to be sold by the Company and by third parties across various product categories, allowing access to its Websites directly and through its mobile Websites, Kindle devices and apps.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 0/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – FAIL
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $312.39
MG Value $0.00
MG Opinion Overvalued
Value Based on 3% Growth $0.35
Value Based on 0% Growth $0.20
Market Implied Growth Rate 6503.87%
Net Current Asset Value (NCAV) -$24.86
PEmg 13,016.25
Current Ratio 0.89
PB Ratio 13.99

Balance Sheet – September 2014

Current Assets $18,572,000,000
Current Liabilities $20,842,000,000
Total Debt $3,099,000,000
Total Assets $40,419,000,000
Intangible Assets $3,332,000,000
Total Liabilities $30,083,000,000
Outstanding Shares 463,000,000

Earnings Per Share

2014 (estimate) -$1.40
2013 $0.59
2012 -$0.09
2011 $1.37
2010 $2.53
2009 $2.04
2008 $1.49
2007 $1.12
2006 $0.45
2005 $0.84
2004 $1.39

Earnings Per Share – ModernGraham

2014 (estimate) $0.02
2013 $0.92
2012 $1.21
2011 $1.81
2010 $1.86
2009 $1.42

Dividend History
Amazon.com Inc. does not pay a dividend.

Conclusion:

Amazon.com Inc. is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, the insufficient earnings growth or stability over the last ten years, the lack of dividends and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the level of debt relative to the current assets, and the lack of earnings growth or stability over the last five years, and the lack of dividends.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $1.86 in 2010 to an estimated $0.02 for 2014.  This level of growth does not support the market’s implied estimate of growth, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value well below the price.

Be sure to check out previous ModernGraham valuations of Amazon.com Inc. (AMZN) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amazon.com Inc. (AMZN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Amazon.com Inc. (AMZN) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

AutoZone Inc. Annual Valuation – 2015 $AZO

220px-AutoZone_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how AutoZone Inc. (AZO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): AutoZone, Inc. is a retailer and a distributor of automotive replacement parts and accessories in the United States. The Company operates in two segments: Auto Parts Stores and Other. The Auto Parts Stores segment is a retailer and distributor of automotive parts and accessories through the Company’s 5,201 stores in the United States, Puerto Rico, Mexico and Brazil. Each store carries a product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. The Other category reflects business activities of three operating segments, including include ALLDATA, which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry; E-commerce, which includes direct sales to customers through www.autozone.com, and AutoAnything, which includes direct sales to customers through www.autoanything.com.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $616.79
MG Value $1,153.92
MG Opinion Undervalued
Value Based on 3% Growth $434.59
Value Based on 0% Growth $254.76
Market Implied Growth Rate 6.04%
Net Current Asset Value (NCAV) -$172.93
PEmg 20.58
Current Ratio 0.73
PB Ratio -12.17

Balance Sheet – November 2014

Current Assets $3,708,000,000
Current Liabilities $5,091,000,000
Total Debt $3,863,000,000
Total Assets $7,717,000,000
Intangible Assets $384,000,000
Total Liabilities $9,380,000,000
Outstanding Shares 32,800,000

Earnings Per Share

2015 (estimate) $34.70
2014 $31.57
2013 $27.79
2012 $23.48
2011 $19.47
2010 $14.97
2009 $11.73
2008 $10.04
2007 $8.53
2006 $7.50
2005 $7.18

Earnings Per Share – ModernGraham

2015 (estimate) $29.97
2014 $26.22
2013 $22.20
2012 $18.25
2011 $14.74
2010 $11.76

Dividend History
AutoZone does not pay a dividend.

Conclusion:

AutoZone is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, lack of dividend payments, and the poor PEmg and PB ratios.  The Enterprising Investor is concerned with the level of debt relative to the current assets along with the lack of dividends.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $14.74 in 2011 to an estimated $29.97 for 2015.  This level of demonstrated growth outpaces the market’s implied estimate of 6.04% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on AutoZone Inc. (AZO)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in AutoZone Inc. (AZO) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

ModernGraham Valuation: Amazon Inc. (AMZN)

moneyCompany Profile (obtained from Google Finance): Amazon.com, Inc. (Amazon.com) serves consumers through its retail websites and focus on selection, price, and convenience. The Company offers programs that enables sellers to sell their products on its websites and their own branded websites and to fulfill orders through them , and programs that allow authors, musicians, filmmakers, application developers, and others to publish and sell content. The Company operates in two segments: North America and International. The Company serves consumers through its retail websites, and focus on selection, price, and convenience. The Company designs its websites to enable millions of products to be sold by the Company and by third parties across dozens of product categories. Customers access its websites directly and through its mobile websites and apps. It also manufactures and sells Kindle devices. In October 2013, Amazon.com Inc acquired TenMarks Education Inc.

Defensive and Enterprising Investor Tests (What is the significance of these tests, and what is PEmg ratio?):

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 0/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – FAIL
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary (Explanation of the ModernGraham Valuation Model)

Key Data:

MG Value $0.00 ** See conclusion
MG Opinion Overvalued
Value Based on 3% Growth $13.00
Value Based on 0% Growth $7.62
Market Implied Growth Rate 213.23%
Net Current Asset Value (NCAV) -$11.88
PEmg 434.97
Current Ratio 1.07
PB Ratio 19.66

Balance Sheet – 9/30/2013 

Current Assets $17,334,000,000
Current Liabilities $16,135,000,000
Total Debt $3,043,000,000
Total Assets $31,861,000,000
Intangible Assets $2,635,000,000
Total Liabilities $22,774,000,000
Outstanding Shares 458,000,000

Earnings Per Share

2013 (estimate) $0.52
2012 -$0.09
2011 $1.37
2010 $2.53
2009 $2.04
2008 $1.49
2007 $1.12
2006 $0.45
2005 $0.78
2004 $1.39
2003 $0.08
2002 -$0.40

Earnings Per Share – ModernGraham 

2013 (estimate) $0.90
2012 $1.21
2011 $1.81
2010 $1.86
2009 $1.41
2008 $1.08

Conclusion:

Value investors seeking to follow Benjamin Graham’s methods have established criteria for whether a company is worthy of investment; in the case of Amazon, the company scores almost as poorly as is possible under these requirements.  In fact, the only requirement for either the Defensive Investor or the Enterprising Investor that Amazon satisfies is the market cap.  As a result, includes a level of risk that is far too high for either investor type, and Intelligent Investors would be best suited by researching other opportunities, beginning with a review of ModernGraham’s Valuation of Apple.  From a valuation side of things, Amazon’s EPSmg (normalized earnings) have dropped from $1.08 in 2008 to an estimated $0.90.  This drop in earnings leads the ModernGraham valuation model to return an intrinsic value of $0, indicating that any value in the company must come from something other than earnings.  It should also be noted that the market seems to be implying a growth rate of over 200%, which is far above what the company has achieved historically.  As a result, Amazon would appear to be overvalued at this time.

What do you think?  Do you agree that Amazon Inc. is overvalued?  What would be your assessment?  Is the company not suitable for Defensive Investors or Enterprising Investors?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Amazon Inc. (AMZN) at the time of publication and had no intention of changing that position within the next 72 hours.

Photo Credit:  Andrew Magill

Back To Top