Shares of Amazon (
AMZN - Free Report) opened over 1% higher on Tuesday to hit $1,686.94, which marked a brand new all-time high for the e-commerce and cloud computing behemoth. The question for investors is should they buy Amazon stock now or wait hoping the price comes down.
Amazon joined fellow tech giants Apple (
AAPL - Free Report) and Microsoft ( MSFT - Free Report) , which both also touched all-time highs on Tuesday, as investors begin to buy back into these technology powers that experienced some non-fundamental related sell-offs over the last few months (also read: Assessing Apple Stock At New All-Time High). Price Performance
Shares of Amazon have skyrocketed nearly 300% over the last three years, which crushes the S&P 500’s 32% climb. The e-commerce company’s growth also thoroughly outpaces Facebook's (
FB - Free Report) 140% surge, as well as Wall Street darling Micron’s ( MU - Free Report) 129% growth.
Over the last two years, Amazon’s growth once again easily surpasses the S&P 500 as well as its industry’s average. If we narrow the focus even more, Jeff Bezos’ company’s stock price movement looks equally impressive.
Investors should be pleased to note that Amazon’s recent momentum has not hurt the company’s current valuation picture. Coming into Tuesday, AMZN was trading at 103.6X forward 12-month Zacks Consensus EPS estimates, which does mark a massive premium compared the S&P 500’s 16.9X, as well as Apple at 15.5X and Microsoft at 25.5X.
But, most investors understand that Amazon is far from a value play at the moment and have been willing to pay a massive premium for Amazon stock based on the idea that the company is still in the midst of its growth phase.
With that said, it is worth noting that Amazon stock is currently trading almost directly in line with its year-long low, and well below both its 52-week high of 282.7X and its year-long median of 146.4X. This means it is not too much of a stretch to say that Amazon stock looks rather attractive at this current valuation, especially considering its recent momentum and growth outlook.
Amazon’s first-quarter revenue surged 43% from $35.71 billion in the year-ago period to hit $51 billion. The company’s product sales climbed roughly 33%, while its services revenues skyrocketed around 63%. This segment includes its widely popular Amazon Prime subscription service as well as its growing, high margin AWS business.
Looking ahead, Amazon’s current quarter revenues are projected to surge over 40% to $53.37 billion, based on our current Zacks Consensus Estimates. Full-year revenues are projected to surge from $177.87 billion to $237.64 billion, which would mark a roughly 34% climb.
Moving to the other end of the income statement, the company that became well-known on Wall Street for casting earnings aside in favor of expansion into nearly every sector of the economy is projected to see its adjusted Q2 earnings skyrocket 530% to $2.52 per share. Amazon’s fiscal 2018 earnings are expected to expand by 181.8% to reach $12.82 per share.
Investors should also note that Amazon has received a ton of positive earnings revision activity recently. Over the last 60 days, the company has earned 13 earnings estimate revisions for the second quarter, with nearly 100% agreement to the upside. During this same time period, Amazon received 16 upward revisions for the full-year against zero downward revisions.
These days, even non-investors understand that Amazon is one of the biggest and fastest growing companies in the world, relying heavily on e-commerce to expand. But the company is also more diversified than ever before.
Amazon’s Prime business has room to grow, especially as more people find out that it includes the company’s streaming service that looks poised to take on Netflix (
NFLX - Free Report) , Hulu, and others with its commitment to spend on new original content. Amazon also has a separate premium streaming music service that can compete against Spotify ( SPOT - Free Report) . Furthermore, the company has expanded its brick-and-mortar footprint with bookstores and more experimental retail locations, not to mention Whole Foods.
Meanwhile, the company has quietly bolstered its “Other” segment revenue, which hit $2.03 billion last quarter on the back of its growing advertising business (also read:
The Latest on Amazon's Booming Advertising Business).
The e-commerce power is also ready to expand in key growth markets, such as India, where its Amazon.in was the fastest growing marketplace in the world’s second-largest country last year. Amazon is also currently a Zacks Rank #2 (Buy) and is expected to see its EPS figure expand at an annualized rate of 30.2% over the next three to five years.
Based on all these factors, now might be a great time to buy Amazon stock, as it could easily keep on surging and its current valuation looks rather attractive considering its history.
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