Amazon.com, Inc. (NASDAQ:AMZN) shareholders have seen a significant increase in the company’s stock price over the past five years. With a 62% rise, it has outperformed the market average of 51% (excluding dividends). The recent week has been particularly profitable for Amazon.com investors, prompting a closer look at the company’s fundamentals.
According to Warren Buffett, there will always be discrepancies between price and value in the market. One way to gauge changes in sentiment towards a company is by comparing its earnings per share (EPS) with its share price. Over the past five years, Amazon.com has achieved an annual EPS growth rate of 16%, higher than the 10% average annual increase in its share price. This suggests that the market has become relatively pessimistic about the company, although it still maintains an optimistic outlook with a P/E ratio of 71.33.
To visualize the change in EPS over time, refer to the graphic below:
[Image: earnings-per-share-growth]It’s worth noting that Amazon.com’s CEO is paid less than the median at similar-sized companies. However, the crucial question is whether the company can continue to grow its earnings. Before making any investment decisions, it is advisable to examine historic growth trends.
Taking a different perspective, Amazon.com shareholders have enjoyed a total shareholder return of 52% over the past year. This performance improvement suggests that the stock’s momentum remains strong, making it worth considering for potential investors. For further insights, it might be wise to check if insiders have been buying or selling shares.
While waiting for insider activity, you can explore a list of growing companies with significant insider buying for free.
Please note that the market returns mentioned in this article reflect the average returns of stocks currently trading on American exchanges.
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Please note that this article by Simply Wall St is general in nature and does not constitute financial advice. It is based on historical data and analyst forecasts, using an unbiased methodology. Our goal is to provide long-term focused analysis driven by fundamental data. We do not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.