Amazon Intrinsic Value Estimated at $189.84 with −4.71% Margin
Amazon’s earnings-based DCF model pegs intrinsic value at $189.84 versus current $198.79, implying a 4.71% overvaluation and fair valuation status. The analysis uses a 47.3% EPS growth rate for 10 years, an 11% discount rate, and 4% terminal growth, while free-cash-flow DCF yields $8.12.
1. Earnings-Based DCF Valuation
Amazon’s earnings-based discounted cash flow analysis calculates an intrinsic value of $189.84 against a market price of $198.79, resulting in a negative margin of safety of 4.71%. The model deems the stock fair valued based on current trading levels.
2. Model Assumptions and Growth Projections
The valuation applies a two-stage approach: a high-growth phase with 47.3% EPS growth for 10 years discounted at 11%, followed by a 4% terminal growth rate. The discount rate reflects a 5% risk-free rate plus a 6% equity risk premium.
3. Free Cash Flow DCF Discrepancy
Using traditional free cash flow per share, the DCF calculator estimates intrinsic value at just $8.12, indicating a significant overvaluation by that method. Investors can switch between earnings and cash flow parameters to test valuation sensitivity.