Does Amazon’s Stock Have More Room To Grow?

by Trefis Team
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Yes, as per Trefis Price estimate Amazon’s (NASDAQ:AMZN) stock has a fair value of $2,218, which is roughly 10% higher than the current market price. Amazon is one of the world’s largest online retailers and dabbles in a broad range of businesses, including its core e-commerce operations, cloud services, digital advertising, groceries, and prescription drugs. The company also has products such as the Alexa personal assistant and ecosystem and provides users access to content through subscription on its Amazon Prime platform.

In this note, we discuss our stock price valuation for Amazon. You can look at our interactive dashboard analysis ~ Amazon’s Valuation: Cheap or Expensive? ~ for more details, and also modify our forecasts for the company’s key metrics to understand how changes impact the company’s stock price.

#1. Estimating Amazon’s Revenues:

  • Total Revenue increased from $136 billion in 2016 to $280.5 billion in 2019 and is expected to increase by 19.3% to $334.7 billion in 2020.
  • A separate interactive dashboard analysis ‘Amazon’s Revenues – How Does Amazon Make Money?’, details our forecast for FY 2020.

#2. Deriving Amazon’s Net Income:

  • Net Income increased from $2.4 billion in 2016 to $11.6 billion in 2019 and is expected to be around $13.4 billion in 2020. The increase in 2019 was primarily due to an improvement in Revenue compared to 2018 offset slightly by a lower net income margin.
  • The 2020 increase will continue to be led by improvement in Total Revenue slightly offset by a further reduction in net income margin.

#3. Determining Amazon’s EPS:

  • EPS rose from $4.90 in 2016 to $22.99 in 2019, and we estimate it to be $26.83 in 2020.
  • The rise in EPS for 2019 can be attributed to an increase in Net Income, partially offset by a higher shares count.

#4. Estimating Amazon’s Share Price:

Our Price Estimate of $2,281 for Amazon’s Stock is based on our Detailed Valuation Model for Amazon and implies an 82.7x P/E Multiple on expected 2020 EPS of $26.83. Our interactive dashboard captures how Amazon compares with its competitors Walmart and Target in terms of Revenue and P/E multiple.


See all Trefis Price Estimates and Download Trefis Data here

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