Amazon.com Inc (AMZN, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $176.42, Amazon.com Inc has witnessed a daily loss of 1.74%, marked against a three-month change of -5.39%. A thorough analysis, underlined by the GF Score, suggests that Amazon.com Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 8/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 8/10
Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. GuruFocus assigned Amazon.com Inc a GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Amazon.com Inc's Business
Amazon.com Inc, with a market cap of $1.85 trillion and annual sales of $604.33 billion, operates as the leading online retailer and marketplace for third-party sellers. Retail-related revenue represents approximately 75% of total, followed by Amazon Web Services' cloud computing, storage, database, and other offerings (15%), advertising services (5% to 10%), and the remainder. International segments constitute 25% to 30% of Amazon's non-AWS sales, led by Germany, the United Kingdom, and Japan.
Financial Strength Breakdown
According to the Financial Strength rating, Amazon.com Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Amazon.com Inc stands impressively at 19.76, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 5.36, Amazon.com Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.22, Amazon.com Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Amazon.com Inc's impressive standing among its peers in generating profit. Amazon.com Inc's Operating Margin has increased over the past five years, with a notable rise to 6.41% in 2023. Furthermore, Amazon's Gross Margin has also seen a consistent rise, reaching 16.32% in 2023. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Amazon.com Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency. Amazon.com Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Amazon.com Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 13.1%, which outperforms better than 67.96% of 1058 companies in the Retail - Cyclical industry. Moreover, Amazon.com Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 19.4, and the rate over the past five years is 18.6. This trend accentuates the company's continued capability to drive growth.
Conclusion
Considering Amazon.com Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
