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Amazon.com Inc (AMZN) Extended Graph Analysis

September 2nd, 2020 Posted by Extended Analysis No Comment yet

Company Profile

Amazon logo

Amazon.com Inc (AMZN) is a powerful and influential American company engaged in retailer online shopping services based in Seattle, Washington  AMZN was founded by Jeff Bezos on July 5, 1994. It began service as an online bookstore, then became a giant company when it comes to e-commerce, media, logistics, payments, hardware and data storage. The company went public in October 1995. AMZN has three business segments, namely: North America, International and Amazon Web Services (AWS).  

Amazon.com Inc (AMZN) Extended Graph Analysis

 

1. AMZN CASH FLOW

AMZN CASH FLOW

2015 2016 2017 2018 2019 2020
Net cash flow provided by operating activitIes 11,920,000,000 16,443,000,000 18,434,000,000 30,723,000,000 38,514,000,000 51,220,000,000
Net cash used for investing activities -6,450,000,000 -9,876,000,000 -27,819,000,000 -12,369,000,000 -24,281,000,000 -35,307,000,000
Net cash provided by (used for) financing activities -3,763,000,000 -2,911,000,000 9,860,000,000 -7,686,000,000 -10,066,000,000 -714,000,000
Capital expenditure -4,589,000,000 -6,737,000,000 -11,955,000,000 -13,427,000,000 -16,861,000,000 -24,263,000,000
Free cash flow 7,331,000,000 9,706,000,000 6,479,000,000 17,296,000,000 21,653,000,000 26,957,000,000
Working Capital 2,575,000,000 1,965,000,000 2,314,000,000 6,710,000,000 8,522,000,000 8,522,000,000

Facts:

  • Cash flow provided by operating expenses was $51 billion in the trailing twelve months.
  • Net cash used for investing activities were -$35 billion in the trailing twelve months.
  • Cash provided by (used for) financing activities were -$714 million in the trailing twelve months.
  • Capital expenditures were -$24 billion in the trailing twelve months.
  • Free cash flow was $27 billion in the trailing twelve months.
  • Working capital was $8.5 billion in the trailing twelve months.

Explanation

  • Cash from operations increased year-over-year at an average rate of 35 percent and grew 330 percent in five years.
  • Cash used for investing activities was investment in property, plant and equipment, acquisitions and purchases of investments.
  • Net cash provided by (used for) financing activities was debt issued and repayments.
  • Capital expenditures were investment in property, plant and equipment.
  • Free cash flow grew 268 percent in five years.
  • Working capital increased year-over-year and it grew 231 percent in five years.

Interpretation

The management is efficient in generating cash year-over-year for its business operations. The company is financially liquid.

 

2. AMZN BALANCE SHEET

AMZN BALANCE SHEET

2015 2016 2017 2018 2019
Total cash 19,808,000,000 25,981,000,000 30,986,000,000 41,250,000,000 55,021,000,000
Current Assets 36,474,000,000 45,781,000,000 60,197,000,000 75,101,000,000 96,334,000,000
Net property, plant and equipment 21,838,000,000 29,114,000,000 48,866,000,000 61,797,000,000 97,846,000,000
Total non-current assets 28,970,000,000 37,621,000,000 71,113,000,000 87,547,000,000 128,914,000,000
Total assets 65,444,000,000 83,402,000,000 131,310,000,000 162,648,000,000 225,248,000,000
Current liabilities 33,899,000,000 43,816,000,000 57,883,000,000 68,391,000,000 87,812,000,000
Non-current liabilities 18,161,000,000 20,301,000,000 45,718,000,000 50,708,000,000 75,376,000,000
Total liabilities 52,060,000,000 64,117,000,000 103,601,000,000 119,099,000,000 163,168,000,000
Retained earnings 2,545,000,000 4,916,000,000 8,636,000,000 19,625,000,000 31,220,000,000
Stockholders equity 13,384,000,000 19,285,000,000 27,709,000,000 43,549,000,000 62,060,000,000

Facts:

  • Total cash was $55 billion in 2019.
  • Current assets were $96 billion in 2019.
  • Net property, plant and equipment was $98 billion in 2019.
  • Total non-current assets were $129 billion in 2019.
  • Total assets were $225 billion in 2019.
  • Current liabilities were $88 billion in 2019.
  • Non-current liabilities were $75 billion in 2019.
  • Total liabilities were $163 billion in 2019.
  • Retained earnings were $31 billion in 2019.
  • Stockholders equity was $62 billion in 2019.

Explanation

  • Total cash increased year-over-year and grew 178 percent in five years. 
  • Total cash represents 24 percent of total assets.
  • Current assets increased year-over-year and grew 164 percent in five years.
  • Current assets represent 43 percent of total assets.
  • Net property, plant and equipment increased year-over-year and it grew 348 percent in five years.
  • New property, plant and equipment represent 43 percent of the total assets.
  • Total non-current assets increased YOY and had a growth of 345 percent in five years. 
  • Non-current assets represent 57 percent of total assets.
  • Total assets increased year-over-year and grew 244 percent in five years.
  • Current liabilities represent 54 percent of total liabilities.
  • Non-current liabilities represent 46 percent of total liabilities.
  • Total liabilities represent 72 percent of total liabilities and stockholders equity.
  • Retained earnings represent 50 percent of the total equity.
  • Stockholders equity represents 28 percent of total liabilities and equity.

Interpretation

The company has a sound balance sheet and is liquid. Moreover, the creditors have two-thirds stake in the company and the investors have one-third stake of the company’s asset. The management is using leverage efficiently to earn profit.

 

3. AMZN INCOME AND MARKET

AMZN INCOME AND MARKET

2015 2016 2017 2018 2019 2020
Revenue 107,006,000,000 135,987,000,000 177,866,000,000 232,887,000,000 280,522,000,000 321,782,000,000
EBIT 2,233,000,000 4,186,000,000 4,106,000,000 12,421,000,000 14,541,000,000 16,869,000,000
Net Income 596,000,000 2,371,000,000 3,033,000,000 10,073,000,000 11,588,000,000 13,180,000,000
EBITDA 8,308,000,000 12,492,000,000 16,132,000,000 28,019,000,000 37,365,000,000 40,788,000,000
Market Capitalization 318,344,000,000 356,313,000,000 563,535,000,000 737,000,000,000 920,000,000,000 1,585,000,000,000
Intrinsic Value 250,672,000,000 300,000,000,000 399,000,000,000 267,000,000,000 209,000,000,000 311,000,000,000

Facts:

  • Revenue was $322 billion in the trailing twelve months.
  • EBIT was $17 billion in the trailing twelve months.
  • Net income was $13 billion in the trailing twelve months.
  • EBITDA was $41 billion in the trailing twelve months.
  • Market capitalization was $1.6 trillion.
  • Intrinsic value was $311 billion.

Explanation

  • Revenue increased year-over-year and escalated 201 percent in five years, in other words, it has a strong revenue growth..
  • Revenue increased 20 and 15 percent in 2018 to 2019 and from 2019 to the trailing twelve months, respectively.
  • EBIT increases year-over-year and has a growth rate of 655 percent in five years.
  • EBIT represents 5 percent of the revenue.
  • Net income increased year-over-year and it grew 2111 percent in five years.
  • Net income represents 4 percent of the revenue, the gross revenue represents 76 percent of the revenue.
  • EBITDA increased year-over-year and it grew 391 percent in five years 
  • Market capitalization was higher than the intrinsic value of AMZN.
  • Intrinsic value was lower by 410 percent than the market value.

Interpretation

The company has a strong financial statement and is profitable. Bottom line escalated over 2,000 percent in five years.

 

4. AMZN FINANCIAL RATIOS

AMZN FINANCIAL RATIOS

2015 2016 2017 2018 2019 2020
Asset turnover (average) 1.78 1.83 1.66 1.58 1.45 1.43
Return on assets % 0.99 3.19 2.83 6.85 5.97 5.86
Return on equity % 4.94 14.52 12.91 28.27 21.95 20.75
Return on invested capital % 3.31 8.42 7.09 14.7 11.72 10.65
Debt/Equity 1.06 0.79 1.37 0.91 1.02 1.03

Facts:

  • Asset turnover was averaging 1.43 ratio in the trailing twelve months.
  • Return on assets was 5.86 percent in the trailing twelve months.
  • Return on equity was 20.75 percent in the trailing twelve months.
  • Return on invested capital was 10.65 percent in the trailing twelve months.
  • Debt/Equity was 1.03 ratio in the trailing twelve months.

Explanation

  • Asset turnover indicates that for every dollar invested in assets, the company generates 1.43 cents  of sales.
  • Return on assets indicate that the company generates 5.86 cents of net income for every dollar invested in assets.
  • Return on equity indicates that the company generated profit of 20.7 cents per share invested in equity.
  • Return on invested capital indicates that the company generated a return of 10.65 percent on its capital base.
  • Debt/Equity ratio indicates that for every dollar in equity the company uses $1.03 in debt.

Interpretation

The financial ratios indicate that the company is efficient in generating revenue from its assets and equity, in other words, the company is productive in managing its investments in assets and equity.

 

5. AMZN KEY EXECUTIVE COMPENSATION

AMZN KEY EXECUTIVE COMPENSATION

2015 2016 2017 2018 2019
Key Executive Compensation
Salary 585,599 763,090 766,840 766,840 766,840
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 7,623,373 94,625,873 0 55,924,179 57,573,239
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 1,610,075 1,613,625 1,635,928 1,778,545 1,861,234
Total 9,819,047 97,002,588 2,402,768 58,469,564 60,201,313
Jeffrey P. Bezos / CEO
Salary 81,840 81,840 81,840 81,840 81,840
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 0 0 0 0 0
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
Total 1,681,840 1,681,840 1,681,840 1,681,840 1,681,840
Andrew Jassy / CEO, Amazon Web
Salary 171,250 175,000 175,000 175,000 175,000
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 0 35,431,144 0 19,466,434 0
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 3,425 3,500 19,447 91,232 173,809
Total 174,675 35,609,644 194,447 19,732,666 348,809
Jeffrey A. Wike / CEO Worldwide Consumer
Salary 172,509 175,000 175,000 175,000 175,000
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 0 32,779,614 0 19,466,434 0
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 3,450 3,500 9,781 80,613 35,725
Total 175,959 32,958,114 184,781 19,722,047 210,725
Brian T. Olsavsky / Senior VP and CFO
Salary 160,000 160,000 160,000 160,000 160,000
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 7,623,373 4,395,447 0 6,770,149 0
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 3,200 3,200 3,200 3,200 3,200
Total 7,786,573 4,558,647 163,200 6,933,349 163,200
Jeffrey Blackburn / Senior VP, Business Development
Salary 171,250 175,000 175,000 175,000
Bonus 0 0 0 0
Annual Other Income 0 0 0 0
Restricted Stock Award 22,019,668 0 10,221,162 57,573,239
Securities Options 0 0 0 0
LTIP Payout 0 0 0 0
Non-Equity Compensation 0 0 0 0
Other Compensation 3,425 3,500 3,500 48,500
Total 22,194,343 178,500 10,399,662 57,796,739

Facts:

  • The total key executive compensation in 2015 was $9,819,047.
  • The total key executive compensation in 2016 was $97,002,588.
  • Key executive compensation in 2017 was $2,402,768.
  • Key executive compensation in 2018 was $58,469,564.
  • Executive compensation in 2019 was $60,201,313.

Explanation

  • Total key executive compensation represents 0.52 percent of the net income in 2019.
  • The total compensation of Jeffrey P. Bezos / CEO represents 2.79 of the total compensation.
  • The total compensation of Andrew Jassy / CEO, Amazon Web represents 0.58 percent of the total compensation.
  • Total compensation of Jeffrey A. Wike / CEO Worldwide Consumer represents 1.35 percent of the total compensation.
  • Key executive compensation of Brian T. Olsavsky / Senior VP and CFO represents 0.27 percent of the total compensation.
  • Compensation of Jeffrey Blackburn / Senior VP, Business Development represents 96 percent of the total compensation.

Interpretation

Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation and other compensation.

 

6. AMZN LOBBYING AND CONTRIBUTIONS

AMZN LOBBYING AND CONTRIBUTIONS

PERIOD AMOUNT
2000 $492,000
2001 $847,200
2002 $920,000
2003 $920,000
2004 $920,000
2005 $920,000
2006 $1,560,000
2007 $1,622,000
2008 $1,340,000
2009 $1,810,000
2010 $2,050,000
2011 $2,220,000
2012 $2,500,000
2013 $3,456,831
2014 $4,940,000
2015 $9,435,000
2016 $11,354,000
2017 $13,000,000
2018 $14,400,000
2019 $16,790,000
2020 $9,165,000

Facts:

Since 2000 to the current date 2020, Amazon.com Inc is incurring lobbying and contributions expenditures to politicians. The annual record is seen above.

Explanation

A note from OpenSecret.org Center for Responsive Politics, quoted below:

“NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on April 22, 2020 and includes spending from January 1 – March 31. Prior years include spending from January through December.”

Interpretation

Lobbying and contributions to politicians vary every cycle; it may increase or decrease in amount depending on the attention given by the federal government on the issues of the company.

 

7. AMZN FINANCIAL STRENGTH

AMZN FINANCIAL STRENGTH

DATA:

Working Capital 8,522,000,000
Total Assets 225,248,000,000
Sales 321,782,000,000
EBIT 16,869,000,000
Market value of equity 1,676,200,000,000
Book value of total liabilities 163,188,000,000
Retained earnings 31,220,000,000

 

CALCULATION Ratio Score Result
A – Working Capital / Total Assets 0.04 1.2 0.05
B – Retained Earnings / Total Assets 0.14 1.4 0.19
C – EBIT / Total Assets 0.07 3.3 0.25
D – Market Value of Equity / Book Value of Total Liabilities 10.27 0.6 6.16
E – Sales / Total Assets 1.43 1 1.43
Z-Score 8.08

 

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The Z-Score of Amazon.com Inc was calculated at 8.08 score. It indicates that the company is very far in declaring bankruptcy in near future or in other terms, the company is not close to insolvency according to Dr. Altman’s grading scale. The main factors of this statistical measurement are profitability, liquidity, leverage and efficiency. AMZN has a strong financial health.

 

OVERVIEW

Amazon.com Inc is a stable company, healthy and profitable. The market value of Amazon.com soared 25 and 72 percent in 2019 and the trailing twelve months, respectively, due to the management’s outstanding performance. Consequently, the stock price of Amazon.com was overvalued from the date of this writing and posting. 

CITATION

https://www.amazon.com/

https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2000&id=D000023883

https://www.morningstar.com/stocks/xnas/amzn/quote

Researched and written by Criselda

 

 

Note:

Research Reports can be found under the company tab.