Week 8 Solomon Amazon

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Amazon Bond & Stock Analysis NASDAQ: AMZN Amazon Bond & Stock Analysis NASDAQ: AMZN LETTICIA SOLOMON OCTOBER 11, 2020 FINANCE 330 6381 LETTICIA SOLOMON OCTOBER 11, 2020 FINANCE 330 6381
Contents Contents Background Financial Leverage Ratios Bond Performance Stock Performance Historical Stock Prices Capital Asset Pricing Model Recommendations References Background Financial Leverage Ratios Bond Performance Stock Performance Historical Stock Prices Capital Asset Pricing Model Recommendations References
Background Background Amazon is a leading Internet Retailer headquartered in Seattle Washington. CEO. And founder: Jeffery P. Bezos Number 2 on fortune 500 list Over 800,000 employees worldwide $3286.65 per share price (Staff, 2020) Amazon is a leading Internet Retailer headquartered in Seattle Washington. CEO. And founder: Jeffery P. Bezos Number 2 on fortune 500 list Over 800,000 employees worldwide $3286.65 per share price (Staff, 2020)
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Financial Leverage Ratios Financial Leverage Ratios Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Debt to assets 0.23 0.26 0.30 0.21 0.24 Debt to equity 0.83 0.97 1.41 0.92 1.17 Interest Coverage 9.73 8.95 5.48 8.84 4.37 2015-2019 Ratio Averages -Debt to Assets: $.25 million -Debt to Equity:$1.06 million -Interest Coverage:$7.47 million Assets are mainly funded through retained earnings and Shareholders paid in capital (Dybek, 2020)
Bond Performance Bond Performance Investors are likely to choose bonds with longer maturity date Low credit risks Callable (Bond Results, 2020). Investors are likely to choose bonds with longer maturity date Low credit risks Callable (Bond Results, 2020). Bond Coupon Maturity Date Last Price Last Yield AMZN393628 4 2.50% 11/29/2020 104.19 0.30% AMZN190395 3.30% 12/05/2021 102.93 0.39%
Stock Performance Stock Performance Amazon* Walmart Industry P/E Ratio 122.57x*** 26.61x*** 89.44x** P/B Ratio 20.52x*** 4.90x*** 18.51x** ROE 20.47%*** 19.13%*** 1.71%*** ROA 6.00%*** 11.02%*** -.40%*** - Amazon has a higher ROE than the industry average at 20.47% compared to 1.17% - Amazon has a higher ROA at 6.00% compared to the industries -.40%. - Amazon has a higher level of profitability and better asset management against competitors based on these percentages.
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Historical Stock Prices Historical Stock Prices Amazon Albaba NOV 19 1788.01 179.01 DEC 19 1804.40 198.58 JAN 20 1875.00 216.60 FEB 20 2010.60 208.67 MAR 20 1906.49 208.59 APR 20 1932.97 189.50 MAY 20 2336.80 195.75 JUN 20 2488.00 205.90 JUL 20 2757.99 215.81 AUG 20 3180.51 254.02 SEP 20 3489.58 289.20 OCT 20 3208.00 295.26 - Amazons major competitor is Alibaba - Amazon’s stock prices consistently rise every year. - In the past 12 months Amazon's stock prices have increased by $1421. - Alibaba’s stock prices consistently rise but are significantly lower than Amazon’s. - Amazon stocks are in high demand - Alibaba stocks are like ly being sold (Yahoo Finance, 2020)
Capital Asset Pricing Model (CAPM) Capital Asset Pricing Model (CAPM) Amazon has a beta of 1.60 Amazon has a ROE of 18.44% Amazon does not pay a dividend and reinvests all cash flows into the company. Amazon ‘s price grew over 475% in the past 5 years. Amazon has a beta of 1.60 Amazon has a ROE of 18.44% Amazon does not pay a dividend and reinvests all cash flows into the company. Amazon ‘s price grew over 475% in the past 5 years.
Recommendations Recommendations Amazon appears overvalued against competitors but highly valuable against their own historical data. Amazon has a highly attractive stock due to growth rate. It is beneficial for Amazon to continue to reinvest net income into operations and hold off on share prices. Amazon is growing fast all around and can stay the course with all current practices. Amazon appears overvalued against competitors but highly valuable against their own historical data. Amazon has a highly attractive stock due to growth rate. It is beneficial for Amazon to continue to reinvest net income into operations and hold off on share prices. Amazon is growing fast all around and can stay the course with all current practices.
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References References Bond Results. 2020. Retrieved from http://finramarkets.morningstar.com Dybek, M. (2020, February 1). Amazon.com Inc. (NASDAQ:AMZN): Analysis of Solvency Ratios . https://www.stock-analysis-on.net/NASDAQ/Company/Amazoncom-Inc/Ratios/Long- term- Debt-and-Solvency. Staff, F. (2020, August 10). Amazon.com: 2020 Fortune 500 . https://fortune.com/company/amazon-com/fortune500/. Yahoo Finance. (2020, October 6). Alibaba Group Holding Limited (BABA) Stock Historical Prices & Data . Yahoo! Finance. https://finance.yahoo.com/quote/BABA/history? period1=1570233600. Bond Results. 2020. Retrieved from http://finramarkets.morningstar.com Dybek, M. (2020, February 1). Amazon.com Inc. (NASDAQ:AMZN): Analysis of Solvency Ratios . https://www.stock-analysis-on.net/NASDAQ/Company/Amazoncom-Inc/Ratios/Long- term- Debt-and-Solvency. Staff, F. (2020, August 10). Amazon.com: 2020 Fortune 500 . https://fortune.com/company/amazon-com/fortune500/. Yahoo Finance. (2020, October 6). Alibaba Group Holding Limited (BABA) Stock Historical Prices & Data . Yahoo! Finance. https://finance.yahoo.com/quote/BABA/history? period1=1570233600.