The Twiggs Money Flow on Amazon stock has broken above the zero line and has gone positive for the first time since August 7, 2017.
Amazon just rolled out Amazon Fresh in my area of Fresno, California. I signed up for the 14-day trial for Amazon Fresh and immediately canceled it because of the poor delivery times. On Saturday, I ordered 4 peaches, and a bag of shredded mild cheddar cheese. Amazon Fresh said they could not deliver it until Tuesday, LOL. I cancelled and told them I’ll just go to the grocery store myself and pick up these items in like a hour. If Amazon Fresh is going to be successful, they have to get delivery times down to same-day and at most, one day later. If they can’t do that they might as well close down their Amazon Fresh website because only the elderly and disabled are going to be willing to wait 3 or more days for their groceries to be delivered.
I think Amazon is poorly executing on their Amazon Fresh division. Amazon Fresh wasted about an hour of my time when you include the time it took me to order and then to cancel my order as well as my Amazon Fresh trial. I won’t try Amazon Fresh again for a long time. Maybe I’ll never try it again. That’s the cold hard reality of retail: first impressions are everything. Amazon has blown it in their roll out of Amazon Fresh by promising too much and then not delivering. Still, if any company can turn this around it’s Amazon.
MKM Partners recently gave Amazon a target price of $3,330 which you can read about here.
I’ve been trading in and out of Amazon stock for about a month now and it’s been a great stock to swing trade.
Amazon Stock
That’s a good basing pattern and perhaps even an inverted Head and Shoulders pattern. The 50 day moving average (blue line) is setting up a possible breakout play. Here is a swing trading lesson on breakout chart patterns.
In addition to the Twiggs Money Flow going positive, the Effective Volume study shows large players volume is still in an uptrend.
Prices have been consolidating lately forming a momentum squeeze on the chart:
The TSI is holding its buy signal cross from August 30, 2017.
There is very little resistance above the current price. There is a support zone below the current price at $972.24, a stop order could be placed below this zone.
Amazon Stock Review
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Profitability (Return On Assets, Return On Equity, and Profit Margin)
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Valuation (P/E, Forward P/E, PEG, Book Value, Price to Book Ratio)
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Growth (EPS and Revenue)
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Health (Current Ratio, Quick Ratio, Debt to Equity, Altman-Z Score)
Summary
Profitability
AMZN's Return On Asserts of 2.19% is inline with the rest of the industry. The industry average Return On Assets is 2.19%. AMZN's Profit Margin of 1.28% is inline with the rest of the industry. The industry average Profit Margin is 0.73%. The Piotroski-F score of AMZN is 5.00. This is a neutral score and indicates average health and profitability for AMZN. AMZN's Return On Equity of 8.28% is worse than the rest of the industry. The industry average Return On Equity is 12.32%. 85% of the industry peers have a better Return On Equity.
Valuation
With a Price/Earnings Ratio of 248.84, AMZN can be considered very expensive at the moment. Compared to an average industry Price/Earning Ratio of 22.70, AMZN is more expensive than its industry peers. On top of this 100% of the companies listed in the same industry are cheaper than AMZN! The Forward Price/Earnings Ratio of 286.79 indicates a quite expensive current valuation of AMZN. The high PEG Ratio, which compensates the Price/Earnings for growth, indicates AMZN does not grow enough to justify the current Price/Earnings ratio. When comparing the current price to the book value of AMZN, we can conclude the stock is very expensive right now. It is trading at 20.24 times its book value. Compared to an average industry price book ratio of 2.91, AMZN is valuated more expensive than its industry peers. 91% of the companies listed in the same industry are valued cheaper.
Growth
Growth is where Amazon excels. Measured over the past 5 years, AMZN shows a very strong growth in Earnings Per Share. The EPS has been growing by 60.65% on average per year. The Earnings Per Share is expected to grow by 33.77% on average over the next 2 years. This is a very strong growth. The EPS growth is accelerating: in the next 2 years the growth will be better than in the last couple of years. Looking at the last year, AMZN shows a very strong growth in Revenue. The Revenue has grown by 24.44%. The Revenue has been growing by 19.70% on average over the past 5 years. This is quite good. AMZN shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.48%.
Health
AMZN has an Altman-Z score of 6.24. This indicates that AMZN is financially healthy and has little risk of bankruptcy at the moment. AMZN is in better financial health than average in its industry. Its Altman-Z score is much better than the industry average of 3.15. AMZN has a Current Ratio of 1.01. This is a normal value and indicates that AMZN is financially healthy and should not expect problems in meeting its short term obligations. The Debt to Equity ratio of AMZN is inline with the industry averages. The Piotroski-F score of AMZN is 5.00. This is a neutral score and indicates average health and profitability for AMZN. Compared to an average industry Current Ratio of 1.21, AMZN is worse placed to pay its short term obligations than its industry peers. A Quick Ratio of 0.73 indicates that AMZN could have some slight problems paying its short term obligations. Compared to an average industry Quick Ratio of 0.86, AMZN is worse placed to pay its short term obligations than its industry peers.
Lance Jepsen
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