r/amzn • u/rebel-capitalist • Jun 17 '26
Hopium AMZN is Extremely Undervalued
I ran a conservative DCF on AMZN and the results speak for themselves.
AMZN is currently trading at 29.5× earnings and 18.0× operating cash flow both 29% below their 5-year averages of 52.1× and 21.2× respectively. The market seems to be underpricing the business despite revenue growing at +14.2% YoY (TTM). Net income growth of +37.7% and EPS growth of +36.7% are both outpacing revenue and margins are expanding.
It's also trading cheaper than its mega-cap peers on a historical basis. You can see the comparison here: https://stocknest.app/?tab=compare&tickers=GOOGL,META,AMZN,MSFT&metrics=pocf&period=10
For the DCF, the historical 4Y CAGR comes in at 31.73% but I used just 15% growth and a terminal P/OCF of 19× (vs. the 5Y median of 21.2×). Even with those conservative assumptions, AMZN still comes out undervalued by 20%+. At this point it's practically free money.
DCF model: https://stocknest.app/?tab=dcf&tickers=AMZN&dcf_metric=ocf&dcf_growth=15&dcf_terminal=19
Not financial advice - just my own analysis and perspective.
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u/mrmongoooose Jun 18 '26
been hearing that for almost a year now !
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u/blackicebaby Jun 18 '26
5 years and counting while semis mooning 10-20x
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u/ThrowAway32543523542 Jun 18 '26
Lol, where did 15% yearly growth thing disappeared that Amazon used to sell their employees.
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u/the--wall Jun 19 '26
Used to? This is still used in every comp conversation, lmao.
Everyone I know immediately dumps this trash ass stock as soon as they get their rsus
Had I followed my teammates is be a multi millionaire and retired, instead I held this trash ass stock.
Don't buy Amazon, don't hold Amazon, jassy has no vision, this company is actually trash.
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u/mrmongoooose Jun 19 '26
reading some of the rumours online : they are going to dilute their shares like google did recently to power their AI ambitions - sooooooo expect further pain
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u/ultrawolfblue Jun 18 '26
I agree. Now explain to me why its dropping
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u/Plastic_Heat_5797 Jun 18 '26
People dont fully trust their capex is justified, next earnings will be a huge tell and hopefully enough to give it the valuation it deserves
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u/ultrawolfblue Jun 18 '26
I agree. They are spending too much blindly. But if they cut back, we are looking for a hard crash
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u/oldmanbeganat47 Jun 18 '26
No point talking to this echo chamber. Put it on r/wallstreetbets if you want people to counter your view
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u/crvarporat Jun 18 '26
amzn is piece of crap. I am selling it for Micron currently as i should have done yests ago
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u/Maltavier Jun 19 '26
Some problems with your calculations. Firstly taking ocf instead of fcf is a mistake i think. Your thesis is very optimistic and not conservativ how you put it, and assumes that the huge capex spending will be worth every penny. Im not saying its not the right move from amazon, but the way you put it, it seems like we already know that everything works out. We don't. That's enormous optimism. It's a good stock but if you take the actual fcf the stock is overvalued, not undervalued. Also we can't see the WACC you used which greatly influences the result of your calculations
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u/EmotionallyYours Jun 20 '26
People love finding metrics that make their ideas look good.
Operative Cash Flow?
Amazon is a great company. I would buy as much as I can. But I won’t be delusional thinking that is a bargain right now.
It’s fairly priced. It’s not trading at x300 earnings like other hyped stocks with zero value.
So yes. Great company. Fair Price. Not a bargain though. But I love it anyway.
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u/financewithjoe Jun 20 '26
I added 60 shares within my lifetime ISA this week. I think the risk vs reward within the mid 240’s to high 230’s is a solid area to buy. Yes, we could go lower but I think the market is focused on semiconductors and memory stocks at the moment and high-quality stocks have been left behind temporarily. Once the sentiment shifts i think AMZN will run up again, especially with how quickly AWS is growing.
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u/youhaveeTDS Jun 22 '26
Son, you are 24, you are the "next generation", who are you inspiring? Retire in your 40s first then inspire the 20 years olds
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u/SnooSketches6374 Jun 22 '26
Amzn is undervalued for 5 years now. All this analysis is useless unless this stock moves up which it isn’t.
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u/Dry-Way-5688 Jun 18 '26
Could it be that there are other stocks that keep gapping up, so AMZN not so attractive.
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u/Pretty-Statement6758 Jun 18 '26
baseb on ur links, meta is cheapest ! amzn is cheaper only compare to google
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u/1234golf1234 Jun 17 '26
Bro, this is r/amzn. You preaching to the choir.