Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $AMZN 🧘🏽‍♂️

•NTM P/OCF Ratio: 15.62x
•5-Year Mean: 22.10x

•NTM FCF Yield: 1.07%
•5-Year Mean: 2.63%

As you can see, $AMZN appears to be slightly undervalued using P/OCF

Going forward, investors can expect to receive ~41% MORE in operating cash flow & ~59% LESS in FCF per share🧠***

Before we get into valuation, let’s take a look at why $AMZN is a quality business

BALANCE SHEET✅
•Cash & Equivalents: $93.18B
•Long-Term Debt: $57.92B

$AMZN has an excellent balance sheet, an AA S&P Credit Rating & 54x FFO Interest Coverage Ratio

RETURN ON CAPITAL🆗 / ✅
•2020: 11.6%
•2021: 8.9%
•2022: 4.2%
•2023: 10.1%
•2024: 15.5%

RETURN ON EQUITY✅
•2020: 27.4%
•2021: 28.8%
•2022: (1.9%)
•2023: 17.5%
•2024: 24.3%

$AMZN has good return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2019: $280.52B
•2024: $637.96B
•CAGR: 17.85%

FREE CASH FLOW🆗(✅)
•2019: $21.65B
•2024: $32.88B
•CAGR: 8.71%

NORMALIZED EPS✅
•2019: $1.15
•2024: $5.53
•CAGR: 36.90%

SHARE BUYBACKS❌
•2019 Shares Outstanding: 10.08B
•LTM Shares Outstanding: 10.78B

MARGINS🆗➡️✅
•LTM Gross Margins: 49.6%
•LTM Operating Margins: 11.4%
•LTM Net Income Margins: 10.5%

*Important for $AMZN to continue expanding margins & increase profitability

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~41% MORE in OCF & ~59% LESS in FCF per share

We’re using P/OCF instead of P/E as historical data reveals a stronger correlation between AMZN's share price and Operating Cash Flow (OCF)

Today, analysts anticipate aggressive OCF (per share) growth between 2025 - 2027:

2025E: $13.11 (21% YoY) *FY Dec
2026E: $16.21 (24% YoY)
2027E: $19.90 (23% YoY)

$AMZN has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $AMZN ends 2027 with $19.90 in OCF per share & see its CAGR potential assuming different multiples (photos attached below also include these CAGR estimates):

18x P/OCF: $358.13💵 … ~21% CAGR

17x P/OCF: $338.24💵 … ~18% CAGR

16x P/OCF: $318.34💵 … ~15% CAGR

15x P/OCF: $298.45💵 … ~12% CAGR

As you can see, $AMZN appears to have strong double-digit CAGR potential if we assume ~16x P/OCF, a multiple less than what it’s trading for today & a multiple that’s justified given its growth rate

Also by assuming a bit of multiple compression, we leave ourselves with some margin of safety

AWS & Amazon Ads will continue to drive growth & profitability. In $AMZN LTM:

☁️AWS revenue: $116.38B
📈Ads revenue: $61.23B

Combined, these segments generated $177.61B net revenue … with ~37% Operating Income Margin

Today at $229💵 $AMZN appears to be a good to fair consideration for investment

#stocks #investing

Data: TIKR
Graphs: FAST Graphs
___

𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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naiive
You're stucked in an elevator in 2 hours

what would you do instead of checking crypto ? https://t.co/DfzLCFd8fm
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Evan
229K PEOPLE IN THE 🇺🇸 FILED FOR UNEMPLOYMENT THIS PAST WEEK BELOW EXPECTATIONS OF 231K

BREAKING

Initial Jobless Claims
Act.: 229K, Est.: 231K, Prev.: 234K - REX Shares
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Simplifying Stocks, CPA
BREAKING ⚠️

Q2 GDP: +3.3% vs +3.0%

JOBLESS CLAIMS: 229K vs 230K
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Evan
THE 2ND READING FOR Q2 GDP WAS JUST RELEASED

US 🇺🇸 GDP for Q2 just came in at +3.3% above expectations of +3% (2nd out of 3 adjustments)

BREAKING

Q2 GDP (QoQ) (2nd Preliminary Reading)
Act.: 3.3%, Est.: 3.0%, Prev.: -0.5% - REX Shares
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Dalius - Special Sits
$SGRP was one of my favorite small-cap shorts this year. It was essentially a merger-break bet with a bunch of red flags (worked out nicely). For more details, I’ll link the SSI write-up in the comments.

Now, SGRP is back to its pumpy ways. Here’s the announcement the company put out: “Investor group acquires 220k SPAR Group shares at 75% premium.”

The stock immediately jumped about 15% on this. There’s only one caveat: the investment was just $440k in total, peanuts compared to the company’s $30m market cap and YTD cash burn of $11m (six months ended).

Management purposely framed the release in a way that hinted at a potential offer or generally hinting at a prove of a signficant undervaluation. Apparently, these “group of third-party investors” are the same ones who were supporting the Highwire Capital bid (the buyer that walked away from the deal back in March).

Despite the fact that these investors have nothing to do with a potential buyout, and the amount they invested was minuscule, just because of how management framed the news the stock popped 15%. I love me some small-cap corporate shenanigans.

This stock will likely drift back to pre-announcement levels. If the jump had been much higher, I would have tried shorting it again, assuming borrow is still available. It could still move higher in the meantime, so it’s worth keeping an eye on for a short later.

And, of course, this is another addition to the small-cap corporate governance hall of fame, along with $SONM and $CNTM from this year’s crop.
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Simplifying Stocks, CPA
BREAKING ⚠️

Q2 GDP: +3.3% vs +3.0%

JOBLESS CLAIMS: 229K vs 230K

*stagflation bros in shambles after that GDP print
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Evan
Nvidia $NVDA CEO Jensen Huang said he’s in talks with 🇺🇸 President Trump's team about selling its better Blackwell AI chip to China 🇨🇳 and that he’s willing to give US government a cut of those sales - Fox Business https://t.co/8tataD5WrN
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Gainify
RT @StockSavvyShay: $NVDA OFFERS U.S. A CUT OF BLACKWELL SALES TO SECURE CHINA DEAL https://t.co/LVUTug6jyh
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Simplifying Stocks, CPA
BREAKING ⚠️

$NVDA IN TALKS WITH U.S. GOVT TO SELL BLACKWELL AI CHIP TO CHINA IN RETURN FOR A CUT OF REVENUES https://t.co/ecRREYP8bZ

$NVDA PRICE TARGET CHANGES 👇

JPMorgan Raises target price to $215 from $170

Rosenblatt Raises target price to $215 from $200

Benchmark Raises target price to $220 from $190

BofA Securities Raises target price to $235 from $220

Citi Raises target price to $215 from $170

Jefferies Raises target price to $205 from $200

KeyBanc Raises target price to $230 from $215

DA Davidson Raises target price to $195 from $135

Truist Securities Raises target price to $228 from $210 - Simplifying Stocks, CPA
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naiive
when you've been in crypto more than 5 years https://t.co/CT2CfTUqpR
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Gainify
RT @BourbonCap: Howard Marks is one of the best investors, and everyone should know about him.

He predicted:

- Dot-Com bubble in 2000
- Global Financial crisis in 2008
- The COVID crash in 2020
- He’s said stocks are in early days of a bubble 7 days ago

Let me tell you about it🧵 https://t.co/6JtstWn4ut
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The Startup Ideas Podcast (SIP) 🧃
Google exec blew my mind showing me what’s possible with nano banana (Google's NEW image model)

3-Levels of Mastering AI

Level 1: Chat with models
Level 2: Use pre-built apps
Level 3: Build custom software

99% of people haven’t even used these tools. (Or at level 1)

If you're reading this, you're early.

Ride the wave
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