By conventional measures of stock prices, Amazon.com Inc. looks very expensive. It’s actually surprisingly cheap.
Twenty-one years after it went public, a share of Amazon stock costs 70 times more than the company’s estimated per-share future earnings. That means investors are willing to pay much more for each dollar of Amazon’s earnings than for shares of Microsoft, Apple, Facebook, Alphabet or Alibaba. The everything store’s price-to-earnings ratio is four times higher than that of the S&P 500 index.
Yet even at this valuation, all but 1 of 52 analysts surveyed by Bloomberg recommend owning the stock, and 48 of them say that investors should buy it and keep it, according to data compiled by Bloomberg.
Which makes Amazon something few analysts ever believed it could become: a value stock, fetching a modest price considering the company’s opportunities for growth.
To understand why Amazon remains a bargain means acknowledging the commitment to create efficiency for consumers by spending more money on more works in progress than anyone. Amazon’s market capitalization just became greater than the combined worth of the leading companies in …read more
Source:: Financial Post – Tech