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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?