Insights

• Amazon demonstrates strong profitability, with net profit margins and EBITDA margins significantly exceeding industry averages.
• The company's liquidity position, as indicated by the current and quick ratios, is relatively weak compared to its peers, requiring close monitoring.
• Amazon's capital structure is conservative, with a low debt-to-equity ratio, providing financial flexibility for future investments.
• The company's growth rate is decelerating, as evidenced by the lower 3-year CAGR compared to the 5-year CAGR for revenue and other key metrics.
• Amazon's cash flow generation has been inconsistent, with a negative free cash flow margin in the most recent quarter, raising concerns about its ability to fund future growth.

Analysis

• Revenue - Revenue has shown consistent growth, driven by Amazon's diverse business segments. - The growth rate is decelerating, as indicated by the lower 3-year CAGR compared to the 5-year CAGR. - Sales and revenue are trending upwards, but are only slightly above the 8-quarter average.
  • Profitability
    • Profitability metrics, including gross margin, operating margin, and net margin, are strong and improving.
    • Net profit margin and EBITDA margin are significantly higher than the industry average, reflecting efficient operations.
    • The company has demonstrated an ability to control costs and improve operational efficiency.
  • Liquidity
    • Liquidity ratios, such as the current ratio and quick ratio, are below the industry average, indicating a need to monitor short-term obligations.
    • The current ratio is trending slightly downward, suggesting a potential weakening of short-term liquidity.
    • Working capital has experienced high volatility, which could pose challenges for short-term financial management.
  • Solvency
    • Solvency ratios, such as the debt-to-equity ratio and debt-to-EBITDA ratio, are healthy and trending downward, indicating a conservative capital structure.
    • The company relies on a mix of debt and equity, with a growing equity base.
    • The debt to EBITDA ratio is much lower than the industry average, indicating a strong ability to cover debt with earnings.
  • Operational Efficiency
    • Amazon demonstrates efficient inventory management, as reflected in stable inventory levels.
    • The company's investments in infrastructure and technology have driven growth in fixed assets.
    • Tangible other assets have shown substantial growth, potentially related to strategic investments or acquisitions.
  • Cash Flow Analysis - Net income growth has been a primary driver of operating cash flow. - Increased capital expenditure reflects Amazon's expansion of its fulfillment network and cloud infrastructure. - The free cash flow margin has been negative in the most recent quarter, raising concerns about cash generation relative to capital spending.
  • Risk Factors
    • The relatively low current ratio compared to the industry average warrants attention.
    • Fluctuations in working capital could pose challenges for short-term financial management.
    • The negative free cash flow margin in the most recent quarter raises concerns about cash generation relative to capital spending.
  • Future Outlook
    • Continued investments in infrastructure and technology are expected to drive further growth in fixed assets.
    • Monitoring the current ratio and managing short-term liabilities will be crucial to maintaining financial flexibility.
    • Growth in equity is projected to continue, supported by strong earnings and profitability.

Benchmarks (as of 2025-06-27)

• Performance Comparison:

  • Amazon.com, Inc. (AMZN) generally outperformed the Consumer Discretionary Select Sector SPDR Fund (XLY) over the 2-year and 3-year periods, with significantly higher returns. However, AMZN underperformed XLY over the 1-year period. More recently, AMZN has shown stronger performance, outperforming XLY year-to-date, over the last week, month, 3 months and 6 months.
  • AMZN's performance relative to XLY has been inconsistent, with periods of significant outperformance followed by underperformance. This suggests that AMZN's stock is more sensitive to specific factors beyond the broader consumer discretionary sector.

• Risk and Return Analysis:

  • The annualized returns show that AMZN provided higher returns over the 2-year (32.13% vs. 15.13%) and 3-year (27.04% vs. 17.18%) periods, but lower returns over the 1-year period (13.24% vs. 20.49%) compared to XLY.
  • AMZN's annualized volatility has generally been higher than XLY's, indicating that AMZN is a more volatile investment. For example, in Q1 2025, AMZN's volatility ranged from 21% to 56.9%, while XLY's ranged from 17.41% to 48.32%.
  • AMZN's maximum drawdown was -56.15% on 2022-12-28, which is significantly larger than XLY's maximum drawdown of -39.67% on the same date. This indicates that AMZN carries a higher risk of significant losses from previous peaks.

• Risk-Adjusted Performance:

  • The Sharpe Ratio for AMZN has generally been lower than that of XLY, suggesting that XLY offers better risk-adjusted returns. For example, in Q2 2025, AMZN's Sharpe Ratio was 0.52, while XLY's was 0.82.
  • AMZN's Beta has consistently been above 1, indicating that it is more sensitive to market movements than XLY. This higher Beta suggests that AMZN's price tends to move more dramatically than the overall market.

• Overall Assessment:

  • AMZN presents a mixed profile compared to XLY. While it has delivered higher returns over longer periods (2 and 3 years), it has also exhibited higher volatility, larger drawdowns, and lower risk-adjusted returns (Sharpe Ratio). The higher Beta suggests that AMZN is more sensitive to market fluctuations, which can lead to greater potential gains but also greater potential losses.
  • Recent trends indicate that AMZN has been outperforming XLY in shorter time frames (Year To Date, 1 Week, 1 Month, 3 Months and 6 Months), but underperforming over the past year. The annualized volatility for both AMZN and XLY has decreased over the past few years, but AMZN still has higher volatility. The Sharpe Ratio for AMZN is lower than XLY, indicating that XLY has better risk-adjusted returns.

Peers Price History(as of 2025-06-27)

• Performance Comparison:
  • Amazon has shown mixed performance compared to its peers. Over the past three years, Amazon has outperformed Alphabet but significantly underperformed Meta Platforms. For instance, over the last three years, Amazon's performance was 105.01%, while Alphabet's was 60.79% and Meta Platforms' was 349.95%. In the shorter term, such as YTD and 6-month periods, Amazon has also underperformed Meta Platforms but outperformed Alphabet.
• Risk and Return Analysis:
  • Amazon's annualized returns have been lower than Meta Platforms but higher than Alphabet. For example, the 3-year annualized return for Amazon is 27.04%, compared to 17.15% for Alphabet and 65.09% for Meta Platforms.
  • Amazon's annualized volatility has generally been lower than Meta Platforms but comparable to Alphabet. In Q4 2024, Amazon's volatility ranged from 19.67% to 34.48%, while Alphabet's ranged from 15.08% to 37.99% and Meta Platforms' ranged from 20.71% to 29.7%.
  • Amazon's maximum drawdown was -56.15% on 2022-12-28, which is less severe than Meta Platforms' -76.74% on 2022-11-03 but more severe than Alphabet's -42.59% on 2022-12-28. This suggests that Amazon carries a moderate level of risk compared to its peers.
• Risk-Adjusted Performance:
  • Amazon's Sharpe Ratio has generally been lower than Meta Platforms, indicating that Meta Platforms offers better risk-adjusted returns. For example, in Q2 2025, Amazon's Sharpe Ratio ranged from 0.52 to 0.65, while Meta Platforms' ranged from 0.79 to 1.18.
  • Amazon's beta is mostly above 1, indicating that it is more volatile than the market. In Q2 2025, Amazon's beta was around 1.35, suggesting that it is more sensitive to market movements compared to Alphabet, which had a beta of around 1.02.
• Overall Assessment:
  • Amazon has shown mixed performance compared to its peers, outperforming Alphabet but underperforming Meta Platforms in terms of historical performance, annualized returns, and risk-adjusted returns. Amazon's volatility is moderate, and its beta suggests that it is more sensitive to market movements. Meta Platforms has demonstrated superior risk-adjusted performance and higher returns, while Alphabet has generally shown lower volatility but also lower returns.
  • A significant trend is the consistent outperformance of Meta Platforms in terms of risk-adjusted returns, as indicated by its higher Sharpe Ratios. Additionally, the higher beta of Meta Platforms suggests that it may be more suitable for investors seeking higher returns but willing to accept greater risk.

Peers Fundamentals(as of 2025-03-31)

1. Market Position and Size:

   • Amazon.com, Inc. (AMZN) leads its peer group with the largest market capitalization at 2016143.75, surpassing Alphabet, Inc. (GOOGL) at 1990504.05 and Meta Platforms, Inc. (META) at 1507039.68.
   • AMZN's revenue of 650313 million is significantly higher than GOOGL's 359314 million and META's 170359 million, demonstrating its strong market presence.
   • Despite its revenue dominance, AMZN's EBITDA of 127907 million is slightly less than GOOGL's 133510 million, but greater than META's 89284 million. Its net income of 65944 million is less than GOOGL's 110996 million and approximately equal to META's 66635 million.
   • AMZN's superior revenue and market capitalization establish its dominant position within the peer group, despite lower profitability metrics compared to GOOGL and META.

2. Profitability and Efficiency:

   • AMZN's Gross Profit Margin of 49.16% is greater than the industry average of 43.69%, but less than GOOGL's 58.54% and META's 81.75%.
   • AMZN's EBITDA Margin of 19.67% is significantly greater than the industry average of 2.03%, but less than GOOGL's 37.16% and META's 52.41%.
   • AMZN's Net Profit Margin of 10.14% is significantly greater than the industry average of -4.63%, but less than GOOGL's 30.89% and META's 39.11%.
   • Despite its size, AMZN's profitability margins are lower than its peers, suggesting higher operating costs or a strategic focus on revenue growth over immediate profits.
   • AMZN's Return on Average Assets of 11.23%, Return on Average Total Equity of 25.24%, Return on Average Total Capital of 17.92%, and Return On Average Invested Capital of 16.68% are all significantly greater than the industry averages, but less than GOOGL and META.

3. Financial Health and Stability:

   • AMZN's Current Ratio of 1.05 and Quick Ratio of 0.84 are less than GOOGL's 1.77 and META's 2.66, as well as the industry averages of 1.61 and 1.23, respectively, indicating lower liquidity.
   • AMZN's Total Debt to Total Equity Ratio of 49.21 is greater than GOOGL's 8.25 and META's 26.76, but less than the industry average of 105.91, suggesting a higher reliance on debt financing compared to its peers.
   • AMZN's Debt / EBITDA of 0.42 is greater than GOOGL's 0.1 and META's 0.32, but less than the industry average of 3.71, indicating manageable debt levels relative to its earnings.
   • AMZN's financial health is stable, but its lower liquidity and higher debt levels compared to peers warrant monitoring.

4. Valuation and Market Perception:

   • AMZN's Enterprise Value To Sales of 3.24 is greater than the industry average of 1.57, but less than GOOGL's 5.1 and META's 8.64.
   • AMZN's Enterprise Value To EBITDA of 15.82 is less than META's 16.25 and the industry average of 24.57, but greater than GOOGL's 13.63.
   • AMZN's Price To Earnings of 30.99 is greater than GOOGL's 18.29 and META's 23.29, but less than the industry average of 84.68.
   • AMZN's Price to Book Ratio of 7.71 is greater than GOOGL's 5.77 and the industry average of 5.29, but less than META's 8.14.
   • AMZN's Price To Sales Ratio of 3.15 is greater than the industry average of 1.56, but less than GOOGL's 5.61 and META's 9.08.
   • AMZN's Price to Free Cash Flow is 96.88, which is significantly greater than GOOGL's 26.58 and META's 28.81, and the industry average of -5.72.
   • AMZN's valuation metrics suggest that the market perceives it as a growth company with high future potential, as reflected in its higher Price to Earnings and Price to Free Cash Flow ratios compared to its peers.

5. Cash Flow and Capital Management:

   • AMZN's Net Operating Cash Flow of 113903 million is less than GOOGL's 132601 million, but greater than META's 96108 million.
   • AMZN's Total Capital Expenditure of 93093 million is greater than GOOGL's 57720 million and META's 43797 million, indicating significant investments in growth initiatives.
   • AMZN's Free Cash Flow of 20810 million is less than GOOGL's 74881 million and META's 52311 million, potentially due to its higher capital expenditures.
   • AMZN's cash flow generation is lower than its peers, reflecting its focus on reinvesting in growth opportunities.

6. Growth and Future Prospect:

   • AMZN shows consistently higher growth in EBITDA and EBIT Margin compared to the peer group average, indicating improved operational efficiency and cost management.
   • AMZN shows consistently lower growth in Sales/Revenue, Net Income, Basic Earnings per Share, and Free Cash Flow compared to the peer group average, suggesting potential challenges in revenue generation and bottom-line performance.
   • AMZN's 3-year CAGR is greater than its 5-year CAGR for EBITDA, Net Income, Basic Earnings per Share, and EBIT Margin, while the peer group shows the opposite trend, suggesting that AMZN's growth in these metrics has accelerated in recent years compared to the peer group.
   • AMZN's future prospects are tied to its ability to sustain its growth in profitability metrics while addressing its challenges in revenue and cash flow generation.

7. Potential for Investment:

   • AMZN presents a mixed investment profile, with its dominant market position and high growth potential offset by lower profitability and cash flow compared to peers.
   • AMZN's higher valuation metrics suggest that investors are willing to pay a premium for its future earnings potential, but its higher debt levels and lower liquidity ratios warrant caution.
   • AMZN may be an attractive investment for growth-oriented investors who are willing to accept lower current profitability in exchange for future growth, but value investors may prefer its more profitable peers.

8. Key Risks and Considerations:

   • AMZN's lower profitability margins compared to peers pose a risk to its long-term earnings potential.
   • AMZN's higher debt levels and lower liquidity ratios could limit its financial flexibility and increase its vulnerability to economic downturns.
   • AMZN's reliance on continued revenue growth to justify its high valuation metrics creates a risk if its growth slows down.
   • Increased competition in the e-commerce and cloud computing markets could erode AMZN's market share and profitability.

9. Overall Assessment:

   • AMZN is a dominant player in the e-commerce and cloud computing markets, with a strong market position and high growth potential.
   • However, its lower profitability and cash flow compared to peers, as well as its higher debt levels and lower liquidity ratios, raise concerns about its long-term financial health.
   • AMZN's high valuation metrics suggest that investors have high expectations for its future growth, but its ability to meet those expectations is uncertain.
   • Overall, AMZN is a high-risk, high-reward investment opportunity that requires careful monitoring of its financial performance and competitive landscape.