Investment Reflection on Amazon
I had made an additional investment in Amazon $亚马逊(AMZN)$
1. Performance and Free Cash Flow: Amazon's Q1 results are promising, showcasing significant growth in both its Retail and AWS segments. Additionally, the modest 5% increase in capital expenditures and impressive expansion in free cash flow to $50.1 billion signal strong financial health and operational efficiency. This robust free cash flow trajectory supports optimism for the company's future performance.
2. Future Projections: Wall Street's consensus estimates predict substantial growth in free cash flow over the next few years, reaching $62.4 billion, $79.0 billion, and $102.7 billion in fiscal years 2024, 2025, and 2026, respectively. If these forecasts materialize, it would represent a significant milestone and could potentially drive further positive sentiment towards the stock.
3. Valuation Considerations: While Amazon's performance and future projections are encouraging, there are potential risks associated with the stock's current valuation. At 31.5 times this year's expected free cash flow, Amazon's valuation could be seen as elevated, particularly given the current interest rate environment. Even with expected free cash flow milestones, the stock may appear less attractive based on its price-to-free-cash-flow multiple three years out.
4. Wall Street's View: Amazon retains a strong buy consensus rating from analysts, with an average price target of $219.50 suggesting a potential upside of 16.8%. This widespread endorsement from analysts could be seen as a positive sign for the stock's future performance.
Final Thoughts
Investment in Amazon was based on solid fundamentals and the company's continued operational excellence. However, there is potential overvaluation risks.
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