Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

Amazon dominates the North American online retail landscape with 2014 product sales of almost $50 billion (excluding services), roughly equal the next nine closest nonauction competitors combined.
With more than half of the world's Internet users coming from developing markets, Amazon has a tremendous global opportunity.
The Kindle products and complementary devices like Fire TV and Amazon Dash represent intriguing customer acquisition and retention tools that capitalize on the shift to digital media while promoting Prime memberships and cloud computing capabilities. Read more 

Bears Say

Amazon's margin expansion is less visible than its growth, given its current investment cycle. We believe the market will be hesitant to reward the stock a premium without demonstrating stronger returns on recent capital investments.
International growth brings unique challenges, including changing e-commerce laws, infrastructure investments, and incumbent competitors in some overseas markets.
The company relies on several delivery companies for distribution. If demand becomes too great, Amazon may have to invest more in its own fulfillment capacity or delivery alternatives. Read more 

Management

Chairman and CEO Jeff Bezos founded Amazon.com in 1994. Tom Szkutak became CFO in September 2002 after 20 years at General Electric, most recently as CFO of GE Lighting. We think Amazon's management team is exemplary in terms of corporate stewardship.  Read more 

Profile

Amazon is among the world's highest-grossing online retailers, with almost $90 billion in net sales expected in 2014. We expect media products will represent 26% of sales   Read more 

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