Exxon vs. amazon
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Transcript of Exxon vs. amazon
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EXXON AND AMAZONDele Dina, Frank Graham, Hyun Sik Kim, Katrina Damschroder,
Layan Barghouthi, Hassan Haider
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Agenda● Short Term Investment Criteria
o Justificationo Outlook
● Long Term Investment Criteriao Justificationo Outlook
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Our RecommendationsShort-Term● Amazon (AMZN)● Buy for the year,
reevaluate at the end of the period
● Must be willing to take risk
Long-Term● Exxon Mobil (XOM)● Buy and hold, ride out
oil price volatility● Long term prospects in
alternatives will also improve company standing forward
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Amazon- Short Term● Currently Trading (4/20) at $389.51● Analyst Estimate of $400.00 (Analyst
Median)● EPSxP/E Price: N/A*● 2014 Revenue: 88.99B● Profit Margin: -.27%● ROE: -2.35%● ROA: .24%
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Amazon● Amazon consistently records a loss.
o *This, in turn, prevents us from calculating P/E, so it is difficult to come to an appropriate share price without a proper valuation model.
● However, despite this lack of profitability, Amazon’s stock has performed exceptionally well.
● No dividend declared or paid
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Amazon Point and Figure Chart
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Amazon Candlestick Chart
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Amazon
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Amazon Analyst Estimates
EPS Trends Current Qtr.Mar 15
Next Qtr.Jun 15
Current YearDec 15
Next YearDec 16
Current Estimate -0.12 -0.16 0.41 2.30
7 Days Ago -0.12 -0.17 0.40 2.27
30 Days Ago -0.12 -0.17 0.43 2.27
60 Days Ago -0.12 -0.17 0.42 2.28
90 Days Ago 0.18 0.01 0.82 3.23
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Amazon- Outlook● Amazon has made consistent investments in
expanding and improving their business model.
● As such, some of these benefits should be realized in the next year
● Additionally, Amazon has an array of services lined up for release in the near future, which may help increase revenue and NOI.
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Amazon- Outlook
● Operating margin expansion should continue to benefit from the shipping loss moderation
● Normalization of the international growth rate● Amazon Web Services (AWS) may generate several billion dollars in
revenue and prove to be the fastest-growing piece of Amazon’s business
● Recent approval of drone shipment technology● In the investment period, summer shopping season, back to school,
and holiday season should be strong times for sales and growth● Expansion of services across the Amazon platform
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Exxon- Long Term● Trading at $86.93● P/E x EPS= $87.02● Slightly undervalued, room for growth● On a downward slide, opportune time to buy
in● Median target at $92.00
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Exxon
Approximately 7% ROA Approximately 19% ROE Approximately 9% Profit Margin Strong capital management and effective
cost controls 2014 Revenue: 369.43B
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Exxon● 95% of revenue is tied to oil operations
o Short term volatility is a risk, but long term stability and price increase will bolster revenues
● Expanded investments in alternative energy and drilling locations
● $.69 per share dividend- regular cash flow through duration of investment
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Exxon● Oil prices are expected to hover in the $50 to
$70 range through the next two years● Increase from recent volatility will help
generate revenue● Historically strong performer with regular
dividend payments● Expansion of non-oil operations
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Exxon - Point & Figure
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Exxon Candlestick Graph
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Exxon
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Exxon Mobil Analyst Estimates
EPS Trends Current Qtr.Mar 15
Next Qtr.Jun 15
Current YearDec 15
Next YearDec 16
Current Estimate 0.82 0.81 3.74 5.25
7 Days Ago 0.84 0.84 3.78 5.31
30 Days Ago 0.82 0.84 3.79 5.35
60 Days Ago 0.77 0.81 3.67 5.32
90 Days Ago 1.09 1.10 4.88 6.21
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Exxon and Oil Prices● Per barrel extraction cost: $12.72
(Bloomberg)● Any price above this level allows Exxon to
cover their production cost
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Exxon- Outlook
● Investments in the Arctic, the ultra-deep sea, & the oil sands of Canada
● Anadarko Petroleum is considering selling its multi-billion dollar stake in Mozambique's giant gas reserves, Exxon is leading contender
● Lubricants for wind, nuclear, and geothermal energy sources that enhance efficiency
● Consistently strong and effective in managing capital and maintaining financial flexibility
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Month AMZN (87 shares)
XOM(389
shares)
Relative Strength
1 33,843 33,843 1.00
2 33,060 33,454 0.98
3 32,799 33,065 0.99
4 32,103 35,010 0.92
5 28,014 33,454 0.84
6 27,492 35,010 0.78
7 27,492 36,177 0.75
8 26,448 35,339 0.75
9 33,495 35,788 0.94
10 28,275 37,344 0.76
11 29,496 38,511 0.77
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Questions