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Is Amazon Stock Still a Bargain at All-Time Highs? (AMZN) By Richard Saintvilus | September 5, 2016 — 10:05 PM EDT
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Amazon.com, Inc. (AMZN) CEO Jeff Bezos, who recently passed Warren Buffett to become the world's third wealthiest person, continues to push all the right buttons when it comes to leading his company. Wall Street has responded by pushing Amazon shares to an all-time high of $776 on Friday.
But with the stock having climbed more than 14% year-to-date, while soaring 51% over the past year, how much further can Amazon shares rise? The current consensus among 43 analysts who cover the stock is that Amazon is still a "buy." This rating has not changed for over a year. Among the 37 firms offering 12-month price target, Amazon has a consensus target of $877.00, including a high estimate of $1,000 per share, while the low estimate is $800. (See also: Behind Amazon's 1,772% Rise in 10 years.)
Amazon shares closed Friday at $772.44. The consensus of $877.00 implies a premium of 13.54%. But does that mean Amazon shares are cheap? The company is projected to earn $5.76 per share for the fiscal year that ends in December. This puts Amazon's forward P/E at 134, which is about eight times higher than the S&P 500 (SPX) index.
But here's the thing: Amazon shares, if going strictly by the P/E metric, have always been expensive. This hasn't prevented the stock from soaring 160% and 270% in the respective three years and five years. Plus, despite the seemingly expensive P/E, if Amazon does earn $5.76 for the current fiscal year, this would translate to earnings increase of around 360%, which would be about 72 times that of the average stock in the S&P 500 index. (See also: Is Amazon Going to Be Worth $6,000 Per Share? )
In other words, when it comes to Amazon, conventional methods of appraising value don't apply. Plus, Jeff Bezos, who some consider one of today's brightest visionary CEOs, has proven that he's not someone to bet against, regardless of the fact that Amazon shares are, by all accounts, expensive.
Read more: Is Amazon Stock Still a Bargain at All-Time Highs? (AMZN) | Investopedia https://www.investopedia.com/news/amazon-stock-still-bargain-alltime-highs-amzn/#ixzz5R0FULfHQ
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