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 important is Amazon's Liquidity
Amazon
financial leverage refers to using borrowed capital as a funding source to finance Amazon Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Amazon financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Amazon's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Amazon's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Amazon's total debt and its cash.
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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Nathan Young is a Senior Member of Macroaxis Editorial Board - US Equity Analysis. With years of experience in the financial sector, Nathan brings a diverse base of knowledge. Specifically, he has in-depth understanding of application of technical and fundamental analysis across different equity instruments. Utilizing SEC filings and technical indicators, Nathan provides a reputable analysis of companies trading in the United States.
View Profile 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
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