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Amazon , inc

Amazon.com , inc. Nick Romjue. agenda. Simple equity valuation Value Line forecasts Dividend discount model Residual income model Growth in residual income Long term growth in revenue Sensitivity analysis. Simple equity valuation. Value line forecasts. Dividend discount model.

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Amazon , inc

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  1. Amazon.com,inc Nick Romjue

  2. agenda • Simple equity valuation • Value Line forecasts • Dividend discount model • Residual income model • Growth in residual income • Long term growth in revenue • Sensitivity analysis

  3. Simple equity valuation

  4. Value line forecasts

  5. Dividend discount model • Amazon does not give dividends • Makes the model worthless • Target price on Value Line was $400 • Discounted back 5 years using 8.99% WACC gives current price of $260.09 • Actual price is $360.02

  6. Residual income model

  7. Solving for growth rate

  8. Long term growth in revenue Implies long term growth rate of 9.09%

  9. Sensitivity analysis

  10. Sensitivity analysis with epm

  11. Questions?

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