Amazon.com, Inc. (NASDAQ:AMZN) has received a lot of attention in recent months due to a significant price movement on the NASDAQGS. The price rose to $200 at one point and then fell to the low of $161. Some price action can provide investors with a better opportunity to enter the stock and potentially buy it at a lower price. One question to answer is whether Amazon.com’s current trading price of $177 reflects the actual value of the large-cap stock. Or is it currently undervalued and gives us a buying opportunity? Let’s take a look at Amazon.com’s outlook and value based on the latest financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Amazon.com
What is Amazon.com worth?
Amazon.com appears expensive according to our price multiple model, which compares the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (P/E) ratio because there is not enough information to reliably forecast the stock’s cash flows. We note that Amazon.com’s ratio of 41.84x is higher than its peers’ average of 20.33x, suggesting that the stock is trading at a higher price relative to the multiline retail industry. But is there another opportunity to buy cheap in the future? Since Amazon.com’s share price is quite volatile, this could mean that it could fall even further (or even rise even further) in the future, giving us another investment opportunity. This is based on the high beta, which is a good indicator of how much the stock moves relative to the rest of the market.
Can we expect growth from Amazon.com?
Future prospects are an important consideration when you’re looking to buy stocks, especially if you’re an investor looking for growth for your portfolio. Buying a great company with solid prospects at a cheap price is always a good investment. So let’s also take a look at the company’s future expectations. Amazon.com’s earnings are expected to grow 94% over the next few years, suggesting a very optimistic future. This should lead to more robust cash flows and result in a higher share value.
What this means for you
Are you a shareholder? It seems like the market has priced in AMZN’s positive outlook well, with shares trading above the industry P/E multiple. At this current price, shareholders may be asking themselves another question: Should I sell? If you believe AMZN should trade below its current price, it may be profitable to sell high and buy again when its price falls toward the industry P/E. But before making that decision, you should check to see if the fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on AMZN for some time, now might not be the best time to get into the stock. The price has outperformed industry peers, meaning there’s likely no further upside from mispricing. However, the bullish outlook is encouraging for AMZN, meaning it’s worth diving deeper into other factors to take advantage of the next price dip.
Since timing is very important when selecting individual stocks, it is worth taking a look at the latest analyst forecasts. Fortunately, you can see the analysts’ forecasts here.
If you are no longer interested in Amazon.com, you can view our list of over 50 other stocks with high growth potential on our free platform.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
