August 31, 2009 - Amazon.com, Inc. (AMZN-NASDAQ) is an online retailer in North America and internationally. It operates various retail Web sites, including amazon.com, amazon.co.uk, amazon.de, amazon.fr, amazon.co.jp, amazon.ca, and amazon.cn.

Amazon has finally been officially accepted as a success. You can tell that from the price of the stock. It's trading at a valuation that most other stocks would love to have. The trailing P/E is 55. Price to sales is 1.78. Price to Book is a whopping 11.19. Those are lofty numbers in any market, but unusually high given where the general market is trading. The doubters have left the building, and Amazon is now a favorite. Quite a change from the end of 2001 when you could buy all the stock you wanted for $5.50 a share.

As usual, it's the earnings that have won the hearts of cold, calculating investors. Earnings per share (eps) increased notably over the last 5 years, with an average annual improvement of 23.17%. More importantly, the consensus from analysts for the next 5 years is for annual average earnings growth of 22.45%. Very few companies are enjoying increases like that. In 2005, earnings per share were 45 cents. Then they jumped to $1.12, followed by $1.49. This year, look for $1.68 (consensus estimate from 28 analysts). Next year, they see $2.16. Nice change from the losses reported in 1999, 2000, 2001, and 2002.

People have found Amazon, and they like using it. Revenues in the June quarter were up 14% from the same quarter last year, to $4.65 billion. The electronics department saw an increase of 29%. Full year revenues should be $22.65 billion, up 18.2% from the $19.17 billion last year. Next year, analysts predict $26.9 billion, up another 18.7%.

Part of the reason these numbers will most likely be reached is the service Amazon offers. If you've ever ordered something from Amazon, you know that certain items, usually over a specified price point, are delivered free. Or you can pay a one time annual fee that guarantees one day delivery (this is the Prime program). Furthermore, purchases on Amazon are not taxed. That combination makes Amazon the first place many consumers look for most things they buy, especially higher-priced goods.

Certain costs are rising. Shipping is one. Also, there is certainly strong competition on the Internet as many other companies offer the same products and compete on price alone. But with higher volumes and lower operating expenses, Amazon should be able to offset the higher shipping cost and thwart most competition on price.

The stock price has been very strong since the latter part of last year, going from a low of $34.68 to its current level of $84. Still it's off the high of $101.10, set in 2007. Over the last 12 months the range has been between $34.68 and $94.40.

More numbers: Market Cap is $36 billion. Forward P/E is 38.62. Operating margin was 3.78% in the last 12 months. Profit margin was 3.23%. Total cash is $3.21 billion. Total cash per share is $7.44. Total debt is $109 million. Current ratio is 1.46. Book Value is $7.54. Beta is 1.23. There are 431.81 million shares outstanding with a float of 332.18 million. Insiders own 23.04%. Institutions have 70.60%. There is no dividend. Value Line gives the company an A+ for its Financial Strength.

Amazon isn't a cheap stock by any measure. But it's also one of the few companies with impressive growth, in sales and earnings. That's hard to find these days. That's why investors love this one.

- Company Web site: www.amazon.com

- Ted Allrich