NAS AMZN StockAnalystNote 20201117

Morningstar Equity Research
Amazon.com Inc AMZN (NAS) | QQQ

Last Price Fair Value Uncertainty Economic Moat™ Moat Trend™ Stewardship Industry Group
3,131.06 USD 3,600.00 USD High Wide Stable Exemplary Retail - Cyclical
Adoption Will Take Time, but Amazon Pharmacy Unlocks Vital Statistics
Several New Growth Opportunities Market Cap (USD Mil) 1,571,013

52-Week High (USD) 3,552.25
52-Week Low (USD) 1,626.03
R.J. Hottovy, CFA Analyst Note 17 Nov 2020 52-Week Total Return % 80.0
Sector Strategist
YTD Total Return % 69.4
Morningstar The announcement of Amazon Pharmacy (a two-day
Last Fiscal Year End 31 Dec 2019
prescription delivery plan available to all Prime members in
5-Yr Forward Revenue CAGR % 21.9
45 states) and the Amazon prescription savings benefit to 5-Yr Forward EPS CAGR % 36.7
Prime members should not come as a surprise, as they Price/Fair Value 0.87
Important Disclosure
represent the logical next step in wide-moat Amazon's Valuation Summary and Forecasts
The conduct of Morningstar’s analysts is broader healthcare category. The move follows the 2018 Fiscal Year: 2018 2019 2020(E) 2021(E)
governed by Code of Ethics/Code of Conduct Price/Earnings 74.2 80.3 85.6 59.7
Policy, Personal Security Trading Policy (or acquisition of PillPack (which will remain a stand-alone
an equivalent of), and Investment Research EV/EBITDA 26.4 25.8 33.2 22.8
Policy. For information regarding conflicts
service for customers managing multiple daily medications), EV/EBIT 59.0 64.4 72.6 44.8
of interest, visit http://global.morningstar Haven Healthcare (the employee healthcare partnership Free Cash Flow Yield % 2.6 2.8 2.3 3.8
.com/equitydisclosures
between Amazon, Berkshire Hathaway, and JPMorgan Dividend Yield % — — — —
The primary analyst covering this company Chase), and Amazon Halo (a healthcare monitoring system)
does not own its stock.
and should make Amazon a more significant healthcare Financial Summary and Forecasts (USD Mil)
Research as of 17 Nov 2020 Fiscal Year:
Estimates as of 31 Oct 2020 player over time. We're not planning to change our five-year 2018 2019 2020(E) 2021(E)
Pricing data through 16 Nov 2020 00:00 Revenue 232,887 280,522 381,593 487,993
Rating updated as of 16 Nov 2020 00:00
assumptions (22% average annual top-line growth,
Revenue YoY % 30.9 20.5 36.0 27.9
operating margins between 9% and 10%) or our $3,600 fair
EBIT 12,420 14,540 21,812 35,349
Currency amounts expressed with "$" are in value estimate based on this development but see the move
U.S. dollars (USD) unless otherwise denoted. EBIT YoY % 202.4 17.1 50.0 62.1
as strategically important for several reasons. Net Income, Adjusted 10,073 11,588 18,650 26,859
Contents Net Income YoY % 232.1 15.0 60.9 44.0
First, the U.S. pharmacy market--we estimate retail and mail Diluted EPS 20.23 23.01 36.57 52.46
Analyst Note 1
Diluted EPS YoY % 228.7 13.8 58.9 43.5
Morningstar Analyst Forecasts 3 pharmacy is roughly a $75 billion market--presents a large
Free Cash Flow 12,832 16,969 30,531 53,227
Methodology for Valuing Companies 7 opportunity for market share, even if acquiring customers
Free Cash Flow YoY % -233.1 32.2 79.9 74.3
takes time for Amazon. Second, it represents a new source Historical/forecast data sources are Morningstar Estimates and may reflect adjustments.
of customer data that could be used for cross-selling
opportunities both online and in physical stores, especially
Profile
as Prime members age into peak prescription ages. Third,
we believe Amazon has an opportunity to improve on Amazon is among the world's highest-grossing online retailers, with $281
existing mail-order prescription platforms--especially when billion in net sales and approximately $365 billion in estimated
physical/digital gross merchandise volume (GMV) in 2019. Online product
coupled with the Halo digital platform--which could unlock
and digital media sales comprised 50% of net revenue in 2019, followed
higher-margin subscriptions/pricing tiers and lead to by commissions, related fulfillment and shipping fees, and other third-party
inroads in other business-to-consumer and business-to- seller services (19%), Amazon Web Services' cloud computing, storage,
database, and other offerings (13%), Prime membership fees and other
business opportunities (making Amazon Business a more subscription-based services (7%), product sales at Whole Foods and other
viable partner for medical, dental, and veterinary physical store retail formats (6%), and advertising services and cobranded
credit cards (5%). International segments constituted 27% of Amazon's
enterprises). Finally, we continue to see a foundation for a
non-AWS sales in 2019, led by Germany, the United Kingdom, and Japan.
third-party healthcare-services marketplace, which could be
margin-accretive for Amazon (much like its third-party seller
marketplace).
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Morningstar Analyst Forecasts
Financial Summary and Forecasts

Fiscal Year Ends in December Forecast
3-Year 5-Year
Growth (% YoY) Hist. CAGR 2017 2018 2019 2020 2021 Proj. CAGR
Revenue 27.3 30.8 30.9 20.5 36.0 27.9 21.9
EBIT 51.5 -1.9 202.4 17.1 50.0 62.1 37.9
EBITDA 43.5 26.7 78.1 30.9 31.4 45.6 27.4
Net Income 69.7 27.9 232.1 15.0 60.9 44.0 36.9
Diluted EPS 67.4 25.5 228.7 13.8 58.9 43.5 36.7
Earnings Before Interest, after Tax 98.9 94.4 281.9 6.0 44.7 49.1 34.5
Free Cash Flow 35.6 -241.8 -233.1 32.2 79.9 74.3 34.8
3-Year 5-Year
Profitability Hist. Avg 2017 2018 2019 2020 2021 Proj. Avg
Operating Margin % 4.3 2.3 5.3 5.2 5.7 7.2 7.9

EBITDA Margin % 11.2 8.8 11.9 13.0 12.5 14.2 14.6
Net Margin % 3.4 1.7 4.3 4.1 4.9 5.5 6.2
Free Cash Flow Margin % 2.1 -5.4 5.5 6.1 8.0 10.9 9.8
ROIC % 22.1 15.4 26.3 24.6 23.1 33.8 53.0
Adjusted ROIC % 33.1 24.7 40.4 34.2 29.2 41.6 68.0
Return on Assets % 5.2 2.8 6.9 6.0 7.2 8.1 8.9
Return on Equity % 21.0 12.9 28.3 22.0 26.1 28.5 29.8
3-Year 5-Year
Leverage Hist. Avg 2017 2018 2019 2020 2021 Proj. Avg
Debt/Capital 0.37 0.47 0.35 0.27 0.22 0.16 0.14

Total Debt/EBITDA 1.03 1.59 0.85 0.64 0.46 0.30 0.26
EBITDA/Interest Expense 20.21 18.36 19.58 22.71 28.97 40.17 47.75
Valuation Summary and Forecasts Discounted Cash Flow Valuation

2018 2019 2020(E) 2021(E) Firm Value Per Share
USD Mil (%) Value
Price/Fair Value 0.68 0.80 — —
Present Value Stage I 483,103 29.1 956.64
Price/Earnings 74.2 80.3 85.6 59.7
Present Value Stage II 643,036 38.7 1,273.34
EV/EBITDA 26.4 25.8 33.2 22.8
Present Value Stage III 534,926 32.2 1,059.26
EV/EBIT 59.0 64.4 72.6 44.8
Total Firm Value 1,661,065 100.0 3,289.24
Free Cash Flow Yield % 2.6 2.8 2.3 3.8
Dividend Yield % — — — —
Cash and Equivalents 55,021 — 108.95
Debt -23,414 — -46.36
Key Valuation Drivers Preferred Stock — — —
Cost of Equity % 9.0 Other Adjustments — — —
Pre-Tax Cost of Debt % 6.5 Equity Value 1,692,672 — 3,351.83
Weighted Average Cost of Capital % 9.0
Long-Run Tax Rate % 25.0 Projected Diluted Shares 505
Stage II EBI Growth Rate % 8.3
Stage II Investment Rate % -41.3 Fair Value per Share (USD) 3,600.00
Perpetuity Year 20 The data in the table above represent base-case forecasts in the company’s reporting
currency as of the beginning of the current year. Our fair value estimate may differ from the
Additional estimates and scenarios available for download at http://select.morningstar.com. equity value per share shown above due to our time value of money adjustment and in cases
where probability-weighted scenario analysis is performed.

Income Statement (USD Mil)

2017 2018 2019 2020 2021
Revenue 177,866 232,887 280,522 381,593 487,993
Cost of Goods Sold 111,934 139,156 165,536 225,982 285,562

Gross Profit 65,932 93,731 114,986 155,611 202,431
Selling, General & Administrative Expenses 61,610 81,014 100,245 133,310 166,569
Other Operating Expense (Income) 215 297 201 489 513
Other Operating Expense (Income) — — — — —
Depreciation & Amortization (if reported separately) — — — — —
Operating Income (ex charges) 4,107 12,420 14,540 21,812 35,349
Restructuring & Other Cash Charges — — — — —

Impairment Charges (if reported separately) — — — — —
Other Non-Cash (Income)/Charges — — — — —
Operating Income (incl charges) 4,107 12,420 14,540 21,812 35,349
Interest Expense 849 1,418 1,600 1,648 1,730

Interest Income 549 259 1,035 1,850 848
Pre-Tax Income 3,807 11,261 13,975 22,014 34,467
Income Tax Expense 770 1,196 2,373 3,361 7,583
Other After-Tax Cash Gains (Losses) — — — — —

Other After-Tax Non-Cash Gains (Losses) — — — — —
(Minority Interest) -4 8 -14 -3 -25
(Preferred Dividends) — — — — —
Net Income 3,033 10,073 11,588 18,650 26,859
Weighted Average Diluted Shares Outstanding 493 498 504 510 512
Diluted Earnings Per Share 6.15 20.23 23.01 36.57 52.46
Adjusted Net Income 3,033 10,073 11,588 18,650 26,859

Diluted Earnings Per Share (Adjusted) 6.15 20.23 23.01 36.57 52.46
Dividends Per Common Share — — — — —
EBITDA 15,585 27,761 36,329 47,736 69,509

Adjusted EBITDA 15,585 27,761 36,329 47,736 69,509

Balance Sheet (USD Mil)

2017 2018 2019 2020 2021
Cash and Equivalents 20,522 31,750 36,092 58,667 102,885

Investments 10,464 9,500 18,929 25,749 32,929
Accounts Receivable 13,164 16,677 20,816 28,420 36,479
Inventory 16,047 17,174 20,497 27,920 35,202
Deferred Tax Assets (Current) — — — — —
Other Short Term Assets — — — — —
Current Assets 60,197 75,101 96,334 140,756 207,495
Net Property Plant, and Equipment 48,866 61,797 72,705 81,124 76,244
Goodwill 13,350 14,548 14,754 14,754 14,754
Other Intangibles — — — — —
Deferred Tax Assets (Long-Term) — — — — —
Other Long-Term Operating Assets 8,897 11,202 41,455 56,391 72,115
Long-Term Non-Operating Assets — — — — —
Total Assets 131,310 162,648 225,248 293,025 370,608
Accounts Payable 34,616 38,192 47,183 64,257 81,003

Short-Term Debt — — — — —
Deferred Tax Liabilities (Current) — — — — —
Other Short-Term Liabilities 23,267 30,199 40,629 55,267 70,678
Current Liabilities 57,883 68,391 87,812 119,525 151,681
Long-Term Debt 24,743 23,495 23,414 22,107 20,966

Deferred Tax Liabilities (Long-Term) — — — — —
Other Long-Term Operating Liabilities 20,975 27,213 51,962 70,684 90,393
Long-Term Non-Operating Liabilities — — — — —
Total Liabilities 103,601 119,099 163,188 212,316 263,039
Preferred Stock — — — — —
Common Stock 5 5 5 5 5
Additional Paid-in Capital 21,389 26,791 33,658 33,658 33,658
Retained Earnings (Deficit) 8,636 19,625 31,220 49,870 76,728
(Treasury Stock) -1,837 -1,837 -1,837 -1,837 -1,837
Other Equity -484 -1,035 -986 -986 -986
Shareholder's Equity 27,709 43,549 62,060 80,710 107,568
Minority Interest — — — — —
Total Equity 27,709 43,549 62,060 80,710 107,568

Cash Flow (USD Mil)

2017 2018 2019 2020 2021
Net Income 3,033 10,073 11,588 18,653 26,884
Depreciation 11,478 15,341 21,789 25,924 34,160

Amortization — — — — —
Stock-Based Compensation 4,215 5,418 6,864 9,055 11,286
Impairment of Goodwill — — — — —
Impairment of Other Intangibles — — — — —
Deferred Taxes -29 441 796 — —
Other Non-Cash Adjustments -90 493 -85 — —
(Increase) Decrease in Accounts Receivable -4,780 -4,615 -7,681 -7,604 -8,058

(Increase) Decrease in Inventory -3,583 -1,314 -3,278 -7,423 -7,283
Change in Other Short-Term Assets — — — — —
Increase (Decrease) in Accounts Payable 7,100 3,263 8,193 17,074 16,746
Change in Other Short-Term Liabilities 1,021 1,623 328 14,638 15,410
Cash From Operations 18,365 30,723 38,514 70,317 89,145
(Capital Expenditures) -10,058 -11,323 -12,689 -34,343 -29,280

Net (Acquisitions), Asset Sales, and Disposals -13,972 -2,186 -2,461 — —
Net Sales (Purchases) of Investments -3,789 1,140 -9,131 -6,820 -7,180
Other Investing Cash Flows — — — 3,786 3,985
Cash From Investing -27,819 -12,369 -24,281 -37,378 -32,474
Common Stock Issuance (or Repurchase) — — — — —

Common Stock (Dividends) — — — — —
Short-Term Debt Issuance (or Retirement) — — — — —
Long-Term Debt Issuance (or Retirement) 9,860 -7,686 -10,066 -1,307 -1,141
Other Financing Cash Flows — — — -9,058 -11,311
Cash From Financing 9,860 -7,686 -10,066 -10,365 -12,452
Exchange Rates, Discontinued Ops, etc. (net) 713 -351 70 — —

Net Change in Cash 1,119 10,317 4,237 22,575 44,219
Research Methodology for Valuing Companies
Qualitative Equity Research Overview intangible assets, switching costs, network effect, cost Our model is divided into three distinct stages:
At the heart of our valuation system is a detailed projection advantage, and efficient scale.
of a company's future cash flows, resulting from our Stage I: Explicit Forecast
analysts' research. Analysts create custom industry and Companies with a narrow moat are those we believe In this stage, which can last five to 10 years, analysts
company assumptions to feed income statement, balance are more likely than not to achieve normalized excess make full financial statement forecasts, including items
sheet, and capital investment assumptions into our globally returns for at least the next 10 years. Wide-moat such as revenue, profit margins, tax rates, changes in
standardized, proprietary discounted cash flow, or DCF, companies are those in which we have very high working-capital accounts, and capital spending. Based
modeling templates. We use scenario analysis, in-depth confidence that excess returns will remain for 10 years, on these projections, we calculate earnings before
competitive advantage analysis, and a variety of other with excess returns more likely than not to remain for at interest, after taxes, or EBI, and the net new
analytical tools to augment this process. We believe this least 20 years. The longer a firm generates economic investment, or NNI, to derive our annual free cash flow
bottom-up, long-term, fundamentally based approach profits, the higher its intrinsic value. We believe low- forecast.
allows our analysts to focus on long-term business drivers, quality no-moat companies will see their normalized
which have the greatest valuation impact, rather than short- returns gravitate toward the firm's cost of capital more Stage II: Fade
term market noise. quickly than companies with moats. The second stage of our model is the period it will take
the company's return on new invested capital—the
Morningstar's equity research group (“we," "our") believes To assess the direction of the underlying competitive return on capital of the next dollar invested ("RONIC")—
that a company's intrinsic worth results from the future advantages, analysts perform ongoing assessments of to decline (or rise) to its cost of capital. During the Stage
cash flows it can generate. The Morningstar Rating for the moat trend. A firm's moat trend is positive in cases II period, we use a formula to approximate cash flows in
stocks identifies stocks trading at an uncertainty-adjusted where we think its sources of competitive advantage lieu of explicitly modeling the income statement,
discount or premium to their intrinsic worth—or fair value are growing stronger; stable where we don't anticipate balance sheet, and cash flow statement as we do in
estimate, in Morningstar terminology. Five-star stocks sell changes to competitive advantages over the next Stage I. The length of the second stage depends on the
for the biggest risk-adjusted discount to their fair values several years; or negative when we see signs of strength of the company's economic moat. We forecast
whereas 1-star stocks trade at premiums to their intrinsic deterioration. this period to last anywhere from one year (for
worth. companies with no economic moat) to 10–15 years or
All the moat and moat trend ratings undergo periodic more (for wide-moat companies). During this period,
Four key components drive the Morningstar rating: (1) our review and any changes must be approved by the cash flows are forecast using four assumptions: an
assessment of the firm's economic moat, (2) our estimate of Morningstar Economic Moat Committee, comprised of average growth rate for EBI over the period, a
the stock's fair value, (3) our uncertainty around that fair senior members of Morningstar's equity research normalized investment rate, average return on new
value estimate and (4) the current market price. This department. invested capital, or RONIC, and the number of years
process ultimately culminates in our single-point star rating. until perpetuity, when excess returns cease. The
2. Estimated Fair Value investment rate and return on new invested capital
1. Economic Moat Combining our analysts' financial forecasts with the decline until the perpetuity stage is reached. In the case
The concept of an economic moat plays a vital role not firm's economic moat helps us assess how long returns of firms that do not earn their cost of capital, we
only in our qualitative assessment of a firm's long-term on invested capital are likely to exceed the firm's cost of assume marginal ROICs rise to the firm's cost of capital
investment potential, but also in the actual calculation capital. Returns of firms with a wide economic moat (usually attributable to less reinvestment), and we may
of our fair value estimates. An economic moat is a rating are assumed to fade to the perpetuity period over truncate the second stage.
structural feature that allows a firm to sustain excess a longer period of time than the returns of narrow-moat
profits over a long period of time. We define excess firms, and both will fade slower than no-moat firms, Stage III: Perpetuity
economic profits as returns on invested capital (or ROIC) increasing our estimate of their intrinsic value. Once a company's marginal ROIC hits its cost of capital,
over and above our estimate of a firm's cost of capital, we calculate a continuing value, using a standard
or weighted average cost of capital (or WACC). Without perpetuity formula. At perpetuity, we assume that any
a moat, profits are more susceptible to competition. We growth or decline or investment in the business neither
have identified five sources of economic moats: creates nor destroys value and that any new investment
provides a return in line with estimated WACC.
Morningstar Research Methodology for Valuing Companies Because a dollar earned today is worth more than a
dollar earned tomorrow, we discount our projections of
cash flows in stages I, II, and III to arrive at a total
present value of expected future cash flows. Because we
are modeling free cash flow to the firm—representing cash
available to provide a return to all capital providers—we
discount future cash flows using the WACC, which is a
weighted average of the costs of equity, debt, and preferred
stock (and any other funding sources), using expected
future proportionate long-term market-value weights.
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3. Uncertainty Around That Fair Value Estimate Morningstar Equity Research Star Rating Methodology
Morningstar's Uncertainty Rating captures a range of likely
potential intrinsic values for a company and uses it to
assign the margin of safety required before investing, which
in turn explicitly drives our stock star rating system. The
Uncertainty Rating represents the analysts' ability to bound
the estimated value of the shares in a company around the
fair value estimate, based on the characteristics of the
business underlying the stock, including operating and
financial leverage, sales sensitivity to the overall
economy, product concentration, pricing power, and
other company-specific factors.
Analysts consider at least two scenarios in addition to

their base case: a bull case and a bear case.
Assumptions are chosen such that the analyst believes
there is a 25% probability that the company will perform
better than the bull case, and a 25% probability that the
company will perform worse than the bear case. The
distance between the bull and bear cases is an
important indicator of the uncertainty underlying the
fair value estimate.
Our recommended margin of safety widens as our

uncertainty of the estimated value of the equity
increases. The more uncertain we are about the
estimated value of the equity, the greater the discount
we require relative to our estimate of the value of the
firm before we would recommend the purchase of the Morningstar Star Rating for Stocks QQQQQ We believe appreciation beyond a fair risk-
shares. In addition, the uncertainty rating provides Once we determine the fair value estimate of a stock, we adjusted return is highly likely over a multiyear time frame.
guidance in portfolio construction based on risk compare it with the stock's current market price on a daily The current market price represents an excessively
tolerance. basis, and the star rating is automatically re-calculated at pessimistic outlook, limiting downside risk and maximizing
the market close on every day the market on which the upside potential.
Our uncertainty ratings for our qualitative analysis are stock is listed is open.
low, medium, high, very high, and extreme. Please note, there is no predefined distribution of stars. QQQQ We believe appreciation beyond a fair risk-
That is, the percentage of stocks that earn 5 stars can adjusted return is likely.
× Low–margin of safety for 5-star rating is a 20% discount fluctuate daily, so the star ratings, in the aggregate, can
and for 1-star rating is 25% premium. serve as a gauge of the broader market's valuation. When QQQ Indicates our belief that investors are likely to
× Medium–margin of safety for 5-star rating is a 30% there are many 5-star stocks, the stock market as a whole is receive a fair risk-adjusted return (approximately cost of
discount and for 1-star rating is 35% premium. more undervalued, in our opinion, than when very few equity).
× High–margin of safety for 5-star rating is a 40% discount companies garner our highest rating.
and for 1-star rating is 55% premium. QQ We believe investors are likely to receive a less than
× Very High–margin of safety for 5-star rating is a 50% We expect that if our base-case assumptions are true the fair risk-adjusted return.
discount and for 1-star rating is 75% premium. market price will converge on our fair value estimate over
× Extreme–margin of safety for 5-star rating is a 75% time, generally within three years (although it is impossible Q Indicates a high probability of undesirable risk-adjusted
discount and for 1-star rating is 300% premium. to predict the exact time frame in which market prices may returns from the current market price over a multiyear time
adjust). frame, based on our analysis. The market is pricing in an
4. Market Price excessively optimistic outlook, limiting upside potential and
The market prices used in this analysis and noted in the Our star ratings are guideposts to a broad audience and leaving the investor exposed to Capital loss.
report come from exchange on which the stock is listed, individuals must consider their own specific investment
which we believe is a reliable source. goals, risk tolerance, tax situation, time horizon, income
needs, and complete investment portfolio, among other
For more details about our methodology, please go to factors.
https://shareholders.morningstar.com.
The Morningstar Star Ratings for stocks are defined below:
Other Definitions
Last Price: Price of the stock as of the close of the market

of the last trading day before date of the report.
Stewardship Rating: Represents our assessment of

management's stewardship of shareholder capital, with
particular emphasis on capital allocation decisions. Analysts
consider companies' investment strategy and valuation,
financial leverage, dividend and share buyback policies,
execution, compensation, related party transactions, and
accounting practices. Corporate governance practices are
only considered if they've had a demonstrated impact on
shareholder value. Analysts assign one of three ratings:
"Exemplary," "Standard," and "Poor." Analysts judge
stewardship from an equity holder's perspective. Ratings
are determined on an absolute basis. Most companies will
receive a Standard rating, and this is the default rating in
the absence of evidence that managers have made
exceptionally strong or poor capital allocation decisions.
Quantitative Valuation: Using the below terms, intended to

denote the relationship between the security's Last Price
and Morningstar's quantitative fair value estimate for that
security.
× Undervalued: Last Price is below Morningstar's

quantitative fair value estimate.
× Fairly Valued: Last Price is in line with Morningstar's
× Overvalued: Last Price is above Morningstar's
Risk Warning
Please note that investments in securities are subject to
market and other risks and there is no assurance or
guarantee that the intended investment objectives will be
achieved. Past performance of a security may or may not be
sustained in future and is no indication of future
performance. A security investment return and an investor's
principal value will fluctuate so that, when redeemed, an
investor's shares may be worth more or less than their
original cost. A security's current investment performance
may be lower or higher than the investment performance
noted within the report. Morningstar's Uncertainty Rating
serves as a useful data point with respect to sensitivity
analysis of the assumptions used in our determining a fair
value price.

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Morningstar Equity Research

Amazon.com Inc AMZN (NAS) | QQQ

Several New Growth Opportunities Market Cap (USD Mil) 1,571,013

Amazon.com Inc AMZN (NAS) | QQQ

Amazon.com Inc AMZN (NAS) | QQQ

Morningstar Analyst Forecasts

Financial Summary and Forecasts

Operating Margin % 4.3 2.3 5.3 5.2 5.7 7.2 7.9

Debt/Capital 0.37 0.47 0.35 0.27 0.22 0.16 0.14

Valuation Summary and Forecasts Discounted Cash Flow Valuation

Amazon.com Inc AMZN (NAS) | QQQ

Morningstar Analyst Forecasts

Income Statement (USD Mil)

Cost of Goods Sold 111,934 139,156 165,536 225,982 285,562

Restructuring & Other Cash Charges — — — — —

Interest Expense 849 1,418 1,600 1,648 1,730

Income Tax Expense 770 1,196 2,373 3,361 7,583

Other After-Tax Cash Gains (Losses) — — — — —

Adjusted Net Income 3,033 10,073 11,588 18,650 26,859

Dividends Per Common Share — — — — —

EBITDA 15,585 27,761 36,329 47,736 69,509

Amazon.com Inc AMZN (NAS) | QQQ

Morningstar Analyst Forecasts

Balance Sheet (USD Mil)

Cash and Equivalents 20,522 31,750 36,092 58,667 102,885

Accounts Payable 34,616 38,192 47,183 64,257 81,003

Long-Term Debt 24,743 23,495 23,414 22,107 20,966

Amazon.com Inc AMZN (NAS) | QQQ

Morningstar Analyst Forecasts

Cash Flow (USD Mil)

Net Income 3,033 10,073 11,588 18,653 26,884

Depreciation 11,478 15,341 21,789 25,924 34,160

(Increase) Decrease in Accounts Receivable -4,780 -4,615 -7,681 -7,604 -8,058

(Capital Expenditures) -10,058 -11,323 -12,689 -34,343 -29,280

Common Stock Issuance (or Repurchase) — — — — —

Exchange Rates, Discontinued Ops, etc. (net) 713 -351 70 — —

Analysts consider at least two scenarios in addition to

Our recommended margin of safety widens as our

Last Price: Price of the stock as of the close of the market

Stewardship Rating: Represents our assessment of

Quantitative Valuation: Using the below terms, intended to

× Undervalued: Last Price is below Morningstar's

Amazon.com Inc AMZN (NAS) | QQQ

Amazon.com Inc AMZN (NAS) | QQQ

Amazon.com Inc AMZN (NAS) | QQQ

Amazon.com Inc AMZN (NAS) | QQQ

body. Morningstar Investment Adviser India Private Limited

The Research Analyst has not served as an officer, director

*The Conflicts of Interest disclosure above also applies to

For recipients in Japan: The Report is distributed by Ibbotson

For recipients in Singapore: This Report is distributed by

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