Amazon's moat score of 77 and management score of 86 point to a business with durable competitive standing and capital discipline, backed by a 10.7% return on invested capital, a 50.3% gross margin, and debt to equity of just 0.4x. Free cash flow yield is thin at 0.3%, suggesting the cash the business throws off relative to its price is currently small.
At $272.27, the stock trades at 21.9 times earnings, against an exit multiple of 26.4x built into the model. That model rests on a 13.2% growth assumption, close to the 13.0% rate measured from the company's own history, and produces a consensus buy price of $139.63, calculated as intrinsic value less a 50% margin of safety.
The tension sits in the margin of safety score of 51. The quality scores describe a well-run, advantaged business, but the current price is roughly double the $139.63 consensus buy price, leaving little room for error if the growth assumption underlying that valuation does not hold.
| Price | $253.71 |
| Market cap | $2.7T |
| P/E ratio | 20.4x |
| Return on invested capital | 10.7% |
| Gross margin | 50.3% |
| Debt to equity | 0.37x |
| Free cash flow yield | 0.3% |
| Growth rate used | 13.2% |
| Growth rate measured | 13.0% |
| Exit multiple assumed | 26.4x |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Amazon.com Inc. rather than accepting ours.