Amazon: WOW!

April 27, 2012

Thinking about Amazon (AMZN)…

With earnings of $1.37 per share (not sure if those are past or expected earnings) and a current price per share of $221.39, Amazon (AMZN) has an earnings yield of .62% (a P/E of 161.6…LOL!). One of three things is going to happen: earnings will catch up or the stock will come back down to earth. Or…people will continue to be wildly optimistic and keep Amazon in the stratosphere.

Think about that for a minute…

If Amazon traded at a much more reasonable P/E of 50, it would be priced at $68.50 (based on earnings of $1.37 per share) or it would need earnings of $4.43 per share to justify its $221 current price.

I don’t own any Amazon stock.

3 responses to Amazon: WOW!

  1. I know – crazy isn’t it?!?! Compare to Apple that trades at 11.4 2013 earnings (which grew at 94% from 2011 to 2012). Crazy. Full disclosure: I don’t own any AMZN but have some $$ in Apple but point this out only to highlight AMZN’s issues.

  2. And even a P/E of 50 would be laughable. Guess that ‘irrational exuberance’ is back…

  3. Yes, BG, a P/E of 50 is too high but it’s not unheard of for tech stocks. I have never own any tech stocks other than Microsoft.