Amazon's stock (NASDAQ: AMZN) has shown significant growth since the start of 2023, outperforming the S&P 500 index. Despite this, the stock is currently trading below its estimated fair value of $205 according to Trefis. The stock price has remained relatively stable, hovering around $170 amidst economic fluctuations.
Amazon's stock performance has been volatile, with returns of 2% in 2021, -50% in 2022, and 81% in 2023. In comparison, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023. This indicates that Amazon underperformed the S&P in 2021 and 2022.
It has been challenging for individual stocks to consistently beat the S&P 500 in recent years, including other heavyweights in the Consumer Discretionary sector and megacap stars like GOOG, MSFT, and AAPL. In contrast, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 each year.
In the fourth quarter of 2023, Amazon exceeded consensus estimates with net sales reaching $170 billion, driven by growth in various segments. The company reported a significant increase in net income, with total non-operating income also showing improvement.
For the full year 2023, Amazon's top-line revenue increased by 12% to $574.8 billion, with operating income more than doubling to $36.9 billion. The firm reported a net income of $30.43 billion compared to a net loss in the previous year.
Looking ahead, Amazon expects Q1 2024 revenues to range between $138 billion to $143.5 billion, with estimated revenues for FY2024 projected to reach $641.44 billion. The adjusted net income margin is anticipated to be around 6.7%, resulting in a net income of approximately $43 billion.
With a P/S multiple of 3.3x, Amazon's valuation is estimated to reach $205. The company's performance will be closely monitored in the coming months to see if it can maintain its growth trajectory and outperform market expectations.
