The price-to-earnings (PE) ratio of Amazon is a crucial metric for investors. It has fluctuated significantly over the years, with a high of 1,062.7 in 1999 and a low of 29.8 in 2001.
Amazon's PE ratio has been influenced by its growth stage and industry trends. As a young company, Amazon's PE ratio was high due to its rapid growth and increasing earnings.
In 2001, Amazon's PE ratio plummeted due to the dot-com bubble bursting. The company's stock price dropped significantly, but its earnings began to recover in the following years.
You might like: Amzn Q4 Earnings
Amazon Overview
Amazon is the world's largest online retailer, with a market value of over $1 trillion. Founded in 1994 by Jeff Bezos, it has grown to become a global e-commerce leader.
Amazon's business model is built around its ability to offer fast and reliable shipping, with over 300 million products available for Prime members to choose from.
The company's focus on innovation has led to the development of new technologies, such as Alexa, its virtual assistant, and the Kindle e-reader.
A different take: Brk B Book Value
History
Amazon's PE ratio has been on a wild ride over the last decade, with an average of 139.76. The current PE ratio of 45.9 is 67% less than the historical average.
The highest PE ratio Amazon has ever seen was 639.6 in the Sep 2015 quarter, with a price of $25.58 and an EPS of $0.04. This is a stark contrast to the lowest point, which was 39.06 in the Sep 2024 quarter, with a price of $186.33 and an EPS of $4.77.
The PE ratio has fluctuated significantly over the years, with some quarters showing a ratio of over 600. For example, in the Jan 2014 quarter, Amazon's PE ratio was 601.07. This is likely due to the company's rapid growth and changing financial situation.
Here's a breakdown of Amazon's PE ratio since 2005:
As you can see, Amazon's PE ratio has been all over the place, but it's currently at a relatively low point. This could be a good opportunity for investors to consider buying Amazon stock.
P/E Ratio Charts and Stats
The P/E ratio chart for Amazon shows that its current ratio is under its 3, 5, and 10-year averages.
The historical P/E ratio for Amazon has changed over time, and you can view the average P/E and standard deviation for different trailing time periods.
Here are the key statistics for the P/E ratio over various time periods:
The 3-year average PE ratio for Amazon is 87.53, and the 5-year average PE ratio is 81.52.
Discover more: Krugerrand Value by Year
Vs Peers
Amazon's PE ratio is a key metric to consider when evaluating its stock performance. It's lower than its peers TSLA and NFLX, but higher than MSFT's and GOOGL's.
Amazon's PE ratio is trading above the peer average of 30.78. This is significant, as it suggests that investors are willing to pay a premium for Amazon's stock compared to its peers.
The PE ratio of Amazon's peers varies widely, ranging from 16.48 for EBAY to 98.44 for TSLA. This highlights the diversity of the tech industry and the unique challenges and opportunities that each company faces.
A different take: Fintechzoom Tsla Stock Symbol
Here's a breakdown of the PE ratios for Amazon and its peers:
Amazon's PE ratio is higher than its peers in the Consumer Discretionary Distribution & Retail sector, but lower than its peers in the Consumer Discretionary sector.
Consider reading: Consumer Staples Leveraged Etf
Specific Time Periods
The Amzn PE ratio has fluctuated significantly over the years.
In the early 2000s, the PE ratio was around 40, indicating that investors were willing to pay a premium for Amazon's growth prospects.
From 2009 to 2011, the PE ratio dropped to around 30 due to the financial crisis.
The PE ratio surged to over 1000 in 2018, reflecting the company's rapid growth and increasing investor optimism.
During the pandemic, Amazon's PE ratio rose to around 70 in 2020, as investors sought safe-haven assets.
For your interest: Royal Dutch Shell B Dividend Yield
Highest and Average Values
The PE ratio for Amazon (AMZN) can vary over time, but it's worth looking at the bigger picture.
AMZN's current PE ratio is under its 3, 5, and 10-year averages.
The 5-year average PE ratio for Amazon Com (AMZN) is 81.52, which gives you a benchmark for comparison.
This average value can help you understand the stock's historical performance and make more informed decisions.
Suggestion: T Rowe Price Growth Stock Fund - Class I
Frequently Asked Questions
What's a good P/E ratio to buy?
A good P/E ratio to buy is typically considered to be below 20-25, indicating a potentially undervalued stock. If the ratio is below this range, it may be a good time to consider investing.
What is a historically good PE ratio?
A historically good PE ratio is typically considered to be between 20 to 25, indicating a potentially undervalued investment. However, this range assumes a value investor's mindset and may not apply to all market conditions.
Featured Images: pexels.com
