Attractive Valuation Signals for Amazon

about 1 month ago

Daniel Pronk

"Now, let's talk about how Amazon is being valued today. And personally, I like to use the price to operating cash flow ratio to value this business because it has been the most consistent and accurate one historically. And here we can see that Amazon is currently trading for 18.5 times operating cash flows and its long-term average all the way back to 2008 has been roughly 26. So after the correction at the end of 2022 when the valuation essentially reset itself, Amazon stock has actually been looking a lot more attractive from a valuation basis. Overall, I do think that Amazon stock is offering value today, but I don't think that it is a must buy right now."

The speaker highlights Amazon's attractive valuation by comparing its current 18.5x operating cash flow multiple with its long-term average of 26x. He notes that despite past underperformance, the stock now appears fairly valued and offers investment attractiveness, assuming continued decent growth over the next five years. This commentary signals a cautiously bullish outlook on Amazon.

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