In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.
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Amazon.com Inc. pages available for free this week:
- Cash Flow Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
Intrinsic Stock Value (Valuation Summary)
|Year||Value||DPSt or Terminal value (TVt)||Calculation||Present value at|
|1||DPS1||= × (1 + )|
|2||DPS2||= × (1 + )|
|3||DPS3||= × (1 + )|
|4||DPS4||= × (1 + )|
|5||DPS5||= × (1 + )|
|5||Terminal value (TV5)||= × (1 + ) ÷ ( – )|
|Intrinsic value of Amazon.com Inc. common stock (per share)|
|Current share price|
Based on: 10-K (reporting date: 2021-12-31).
1 DPS0 = Sum of the last year dividends per share of Amazon.com Inc. common stock. See details »
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.
Required Rate of Return (r)
|Rate of return on LT Treasury Composite1||RF|
|Expected rate of return on market portfolio2||E(RM)|
|Systematic risk of Amazon.com Inc. common stock||βAMZN|
|Required rate of return on Amazon.com Inc. common stock3||rAMZN|
1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).
3 rAMZN = RF + βAMZN [E(RM) – RF]
= + [ – ]
Dividend Growth Rate (g)
Company does not pay dividends.