AMAZONVS.WALMART
REALVISIONCASECOMPETITION
Team:Fletcheros
By:NathanCohen-Fournier,AdolfoGatti,AngelicaNouhi
RepresentingtheFletcherSchoolofLaw&Diplomacy,TuftsUniversity
TABLE OF CONTENTS
Abstract
Page 2
Contextual Analysis
Page 3
Amazon Analysis
Page 4
Walmart Analysis
Page 8
Valuations
Page 11
Exhibits
Page 15
End Notes
Page 27
1
ABSTRACT
Choosing to invest between Amazon and Walmart seems, at first glance, a straightforward decision. Who wouldn’t invest in the new, exciting player on the block? One is a
promising company built on growth and the vision of a brilliant entrepreneur; the other has
become the largest by revenues and number of employees. One incarnates financial health,
proven track record, and stability; the other, astronomical stock returns accompanied by high
volatility and uncertainty.
We chose the financial strength and consistency of Walmart. We found Walmart’s stock
to be fairly valued. Although financial returns are not expected to be massive, we believe a
steady dividend from a healthy company is the best choice in a turbulent global economy.
Amazon surely has much to offer in promising e-commerce and cloud computing markets.
Nevertheless, many competitors are eyeing these markets, capital requirements are increasing
with sales, and numerous socio-economic risks remain. In fact, we found the stock price of
Amazon to be overvalued by roughly 30%.
2
An investment for the next ten years, Amazon versus Walmart: which to choose? We
picked the stability of Walmart over the uncertainty of Amazon. Throughout this paper, we will
expose the rationale for our investment thesis.
CONTEXTUAL ANALYSIS
During the summer of 2015 Amazon leapfrogged Walmart in terms of market value. This
is the story of two giants facing each other on various battlefields; the biggest being the US retail
industry. The retail industry follows macro-economic trends and has been subject to several
changes due to the advent of technology. A key contributor of transformation in the industry has
been e-commerce. In the US, e-commerce accounted for 20% of the growth in the industry,
which totaled $304.9 billion in 20141 (Exhibit 1). A necessary condition for e-commerce is
internet access: according to the World Bank, 40.7% of world’s population in 2014 had internet
access.2
In the US, e-commerce represented 6.4% of the total retail industry during 2014, and is
projected to increase to 8.9% by year-end 2018 (Exhibit 2).3 Amazon is the leader holding 16%
of the market share,4 whereas Walmart has just recently entered the fray. Additionally, mobile
commerce is gaining a stronger imprint, and is estimated to reach $132.69 billion by 2018 or
27% of total e-commerce sales (Exhibit 3).5
3
AMAZON ANALYSIS
Since its IPO in 1997, Amazon’s market capitalization has increased by 53,040%,
growing from $441 million in Q2-2007 to $235 billion in Q3-2015.6 While the company has
seduced the masses and become a Wall-Street darling, it only recently started to generate much
anticipated profits.
Amazon is considered by many a technology
stock. Indeed, few companies have spent as much in
CAPEX and R&D as Amazon, which has invested
12% of its total sales since 2000.7 Since 2010, the
firm expanded its square footage at a CAGR of 39%
while
providing
facilities
with
state-of-the-art
machinery, including recently acquired Kiva robots.8
Amazon’s capacity to branch out from its core
Source: Amazon
businesses is exemplified by Amazon Web Services (AWS), the company’s new cloud
computing service, which has grown at a CAGR of 52% since 2010.9
Amazon has been able to translate its technological advantages into tangible benefits for
consumers. According to a study conducted by RBC, Amazon is the leader per convenience,
price, and selection in the e-commerce industry,10 giving it a dominating position and placing it
first on US brand rankings.11 The aura that surrounds Amazon’s success results from the
charisma of its founder, Jeff Bezos. Bezos has been nimble at acquiring talent and pushing
employees to constantly create and develop new solutions, while maintaining the focus on
customers. “Above all else, align with customers. Win when they win. Win only when they
win.”12
4
In order to meet the lofty valuation metrics attributed to its business, Amazon has to
pursue its growth streak. Growth is the fundamental pillar of Amazon’s strategy. AWS is
expected to be the primary driver of the firm’s progress, as it maintains a leading position within
the cloud market.13 Amazon has been heavily investing in AWS and over a third of the firm’s
PP&E can be attributed to this segment.14 Forrester Research estimates that public cloud
computing will rise from $58 billion in 2013 to $191 billion by 2020.15 High-profile competitors
such as Google, IBM, and Microsoft are also seeking greater market share. Who is better
positioned to capture growth? Amazon the retailer or the Silicon Valley giants? In such a
competitive environment, price cuts will continue to be the norm16, potentially eroding
Amazon’s profit margins and market share which stands, today, at nearly 30%.17
AWSQuarterlySalesandEBIT%
$3.000
30%
$2.000
20%
$1.000
10%
$0
0%
2014Q1
2014Q2
2014Q3
2014Q4
AWSSales
2015Q1
2015Q2
2015Q3
EBIT%
Source: Amazon Quarterly Results (2014-Q1 to 2015-Q3)
Growth is also expected to come from international markets. Since 2010, growth in
international sales has been lagging US rates (Exhibit 4).18 Although we believe US operations
will be the primary driver of Amazon’s newly found profitability, we foresee high CAPEX
investments in international markets. Between 2012 and 2014, international operations accounted
for 40% of sales, 33% of assets and, yet, only 22% of CAPEX.19 We see a future alignment in
the long-term, with more investments concentrated internationally.
5
AmazonUSandInternationalSalesandGrowth
$60.000
100%
$50.000
80%
$40.000
60%
$30.000
40%
$20.000
20%
$10.000
$0
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
USrevenues
InternationalRevenues
USGrowth
InternationalGrowth
Source: CapIQ Amazon Financial Statements (2000-2014 actuals)
Amazon’s ability to maintain its dominating position in e-commerce is under threat. Once
competitors catch up with Prime and same-day shipping (Walmart and Ebay already have similar
offerings), consumers will demand even lower prices and differentiation. In this regard, brickand-mortars have the lead, due to immediacy, trial-touch-feel, and ease-of-return.
Amazon’s future is filled with infinite, yet uncertain, possibilities, ranging from drone
deliveries to supply chain robotics. The company is also starting to play into the booming B2B ecommerce market with its Amazon Business segment, competing head-to-head with Alibaba.
However, Amazon’s poor human-resource practices are increasingly likely to spur negative
press. Until now, consumers’ perspective have remained overwhelmingly positive despite the
fact that Amazon is destroying small businesses, mistreating employees, and using tax havens to
enhance its bottom-line. Sooner rather than later, this will damage the company’s reputation. In
addition, its high turnover is creating new competitive threats: ex-employees have founded
FlipKart in India, and Jet.com in the US.
6
If the company is able to sustain AWS’ leadership, diversify its portfolio, and resist
potential PR damages, it will remain the undisputed leader. We doubt the future will be so bright
due to our expectations of increased competitive pressures from all angles.
Investors have reacted positively to Amazon’s Q3 2015 results, with the stock surging by
10% upon the announcement.20 Do profits matter? As the saying goes, cash is king. The
company’s operating cash flows (OCF) have been steadily increasing; yet, a large part of it stems
from depreciation, which represented roughly 60% of OCF in 2014 (Exhibit 5).21 Moreover, a
portion of Amazon’s OCF has been driven by a negative cash conversion cycle. Capital is freedup by stretching payables and by pushing inventory to third-party sellers, who account for over
40% of units sold.22 The cash conversion cycle has been worsening and has negatively impacted
free cash flow for the first time since 2000 (Exhibit 6).23
Furthermore, since 2010, debt and equivalents have risen from $2.4 billion to $20.2
billion in 2014,24 representing a CAGR of 70% and a debt-to-equity ratio of 150%. The leverage
is even more accentuated when taking into account operating leases. In addition, the return on
invested capital (ROIC) has been highly volatile, lingering in the ‘value destruction’ zone of
below 10% (Exhibit 7).25 It seems as though Amazon’s businesses are becoming more capital
intensive as they grow. This could prove highly problematic as the firm has been filling the gap
with debt and debt equivalents.
Revenue growth and EBITDA are always at the front-page of any Amazon story. Having
looked under the carpet, we find that the situation is not so bright. Under-pressure margins,
ongoing tax investigations in the EU, and potential PR spills all add up to create serious
challenges for Amazon’s sustainable long-term cash flows, let alone profits. Amazon promises
lucrative returns in indisputably growing markets. On the flip-side, its eagerness to expand into
7
uncharted territories exposes it to a number of risks. Preeminently, we believe the firm risks
losing focus on its core business.
WALMART ANALYSIS
Today, Walmart remains the US largest retailer and the world’s largest company by
revenues.26 Its market dominance and competitive strengths have been achieved through the
synergetic combination of eight distinctive factors: low prices, cost consciousness, product
selection, supplier power, technology, expansion, human capital and customer service.
Walmart’s strategy relies on cost leadership. ROIC has been stable around 12% over the past
decade and investors have been rewarded both through stock repurchases and dividends, which
have been raised for 41 consecutive years (Exhibits 8).27
Over the past three years, the firm has invested billions to modernize and adapt to
changes in the industry. CAPEX has averaged 2.6% of total sales between 2012 and
2014. Within this timeframe, Walmart injected a total of $2.7 billion in its e-commerce business
and recently announced an additional $2 billion investment for the next two years.28
Walmart’s future success depends on the company’s ability to leverage the competencies
that have made it into the retailer giant it is today. By re-investing in price, product, accessibility
and experience, we foresee the next decade to reinforce its leadership position.
Currently, Walmart has over 11,000 stores operating in 28 countries, counting 2,290
locations in Mexico, 557 in Brazil and 432 in Japan.29 International sales accounted for 28% of
total revenues in 2014.30 Over the last five years, the international segment has reported an
average revenue growth of 7%, and operating income, as percentage of sales, grew from 3.8% in
8
2013 to 4.5% in 2014.31 In 2014, the US segment reported sales growth of 3.1%, while operating
income was 7.4% of total sales, in contrast with 7.8% for 2013 (Exhibit 9).32
In the coming decade, we foresee the company continuing to strengthen its position in the
Chinese marketplace, expanding into new emerging markets, and opening additional
Neighborhood Markets in the US.
In 2015, Walmart counted 411 stores in China, with plans to open an additional 115 by
2017.33 Many interpreted the company’s decision to slow down its original expansion in China
as an indicator of Walmart’s decline. However, we view this as a strategic pivot from a blanketed
expansion policy towards increasing operational efficiency. This is exemplified by the
company’s recent announcement of a $59 million investment focused on remodeling and
improving 50 locations across the country.34 Walmart's potential success in China relies on its
ability to gain consumers’ trust. For this reason, in 2014, it announced investments in higher
safety management procedures, including various levels of meat and produce audits to ensure the
authenticity of their content and origin; an important distinguishing factor that provides Walmart
with an advantage over its local competitors. This, together with the “Every Day Low Prices”
(EDLP) strategy, is targeted towards the expanding Chinese middle class: an estimated 109
million people today, and 854 million by 2030, the largest middle class of the World.35
While US power brands such as Google and EBay attempted to penetrate the Chinese
market by foreign direct investment, and failed, Walmart successfully entered the market via a
joint venture with local retailer Yihaodian. The JV’s user base increased from 4 million
registered users in 2010 to over 100 million in 2015.36 In the summer of 2015, upon three years
of partnership, Walmart acquired full control of the Chinese e-commerce company, reporting a
traffic increase of over 60%.37 This is especially important as Chinese e-commerce is projected
9
to grow to over $1 trillion by 2018, double the US’s expected market of $491 billion.38 In 2014,
Tmall held over 61% of the Chinese e-commerce market, followed by JD at 18.6%, while
Yihaodia held 1.4% and Amazon 1.3%.39 Additionally, one of Amazon biggest competitors,
Alibaba, has recently partnered with Walmart.40 In fact, 25 stores now offer AliPay, with plans to
further expand.41Similarly, Walmart has entered the Nigerian retail market through a joint
venture with Massmart, a leading African retailer in 2011.42 A recent McKinsey & Co. study
estimates that Nigeria’s consumers market will rise at an average rate of 8% a year, tripling by
2030.43
Both nationally and internationally, Walmart has been faced with a challenge to
transform and shift its core business from physical stores to e-commerce. In its 2015 Annual
Report, Walmart reported online sales growth of 22%, accounting for $12.2 billion in sales. This
places it as the third largest Internet retailer in the US, after Amazon and Apple.44
During Fiscal Year 2015, 56% of the $485 billion of Walmart’s revenues were generated
through the sale of groceries.45 As demand for food is rising with the world’s population, the
global grocery retail industry, which today corresponds to more than $2 trillion a year, will
continue to grow with increasing prices, resulting from climate change: “Changes in temperature
and rainfall patterns could lead to food price rises of between 3% and 84% by 2050.”46 (Exhibit
10) While the battle between the two is usually perceived as head-to-head, in reality, Walmart
competes in a very different segment than the Seattle-based company. As Walmart is expanding
its fresh-produce selection, focusing on organic and locally sourced items, Amazon is testing
Amazon Fresh: a delivery program currently offered in a selected number of cities, where
members can receive a limited number of non-perishable goods at their doors.47
10
The company’s financials statements are exceptionally stable, with gross margins
constantly hovering around 24%, while profit margins averaged 3.5% between 2012 and 2014
(Exhibit 11).48 The company’s return on equity remains strong, reported at 19% in 2014,
compared to the retail industry’s of 15.12%49, and Amazon’s 2.92%.50 Return on capital has been
constant at 12% since 2012 (Exhibit 12).51
As competition becomes increasingly stringent on price and product selection, Walmart
has been shifting its strategy from “daring to be bad” to “daring to be good.”52 Ten years ago,
Walmart was under extreme scrutiny as it was facing numerous legal battles due to claims of
discrimination, use of illegal immigrants, and poor environmental practices.53 Walmart is
undertaking numerous initiatives to enhance the sustainability of its global supply chains, has
increased wages through 2018, and has extended training programs for associates.54
Furthermore, while working on diminishing waste and on achieving 100% renewable energy, the
Arkansas giant has also challenged its suppliers to implement policies that reduce their
environmental impact. In an already mature and saturated market, these policy choices make a
difference to customers who are increasingly rewarding socially conscious corporations.
All-in-all, Walmart will not be revolutionized within the next ten years. The company is
undertaking small but meaningful changes, without endangering its competitive advantages.
VALUATION
As we see in Table A, from a multiples-basis, it is quite clear that Amazon is priced
based on future potential. Although Google and Apple are not regarded as direct competitors, we
believe they represent a good long-term view of where Amazon’s multiples could be headed. On
11
the other hand, Walmart’s multiples are the result of a proven track-record and a no-frills
business model.
Table A: Multiple Analysis
Q2 2015
EV/EBITDA
EV/IC
P/E
AMZN US
WMT US
AAPL US
TGT US
GOOGL US
COST US
Equity
Equity
Equity
Equity
Equity
Equity
31.3
7.8
7.4
9.2
10.1
14.2
9.3
2.1
2.8
2.3
2.5
3.5
741.9
14.7
14.5
18.8
27.6
26.5
Source: Bloomberg, Q2 2015
WALMART
Based on our financial analysis and pro-forma statements, we believe Walmart’s stock to
be slightly undervalued. Our calculations indicate an intrinsic value of $62 for 2015, versus the
present market value, as of November 6th, of $58.78 (Exhibit 13). Where Amazon’s stock is
overvalued due to inflated future expectations, Walmart’s price reflects investors’ perceived
stability of the company.
We have forecasted Walmart’s financial statements for the next ten years with an annual
revenue growth of 4% through 2018, increasing to 5% until 2020, based on our analysis of the
company’s international expansion. E-commerce revenues are forecasted at 5% of total revenues,
with annual growth of 25% between 2017 and 2020, decreasing to the upper teens by the end of
our forecasting period and converging towards the industry average (Exhibit 14). Profit margins
through the forecasted years remain stable and comparable to historical trends, at 3.5%.
12
AMAZON
Amazon’s stock price is trading at over $650. Per our model, Amazon’s consolidated
sales must continue to grow by 20% yearly to maintain such value, without accounting for of the
many uncertainties the company is facing. Our discounted cash flow (DCF) model provides a
value of $460, a 30% discount from today’s stock price. We foresee the growth in the various
segments to tame, but growth by 2025 remains at a consolidated 12%, which is, by no means,
tepid.
Graphic 1: Amazon Actual and Forecasted Growth by Segment
.
The EBITDA margins are forecasted to double from 5.1% in 2014 to 10.8% in 2025E
due to the change in the sales mix where AWS will represent roughly a third of total. We also
expect CAPEX to remain around 4% to 5% of sales. Other items have been modeled based on
13
historical 5-year performance and a reversion-to-mean. For a detailed view of financial
statements, please refer to Exhibits 15 and 16.
Based on our research and analysis, we are confident that Walmart is the better
investment for the next ten years. Other than a simple long investment structure, we would also
recommend shorting the Amazon stock until the price re-adjusts to its fundamental value (10%
range) and creating a beta-neutral exposure to mitigate market risks.
14
EXHIBITS
EXHIBIT 1
E-COMMERCEas%ofTOTALSALES
10,0%
9,0%
8,0%
7,0%
6,0%
5,2%
5,0%
6,4%
5,8%
7,6%
7,0%
8,9%
8,2%
4,0%
3,0%
2,0%
1,0%
0,0%
2012
2013
2014
2015
2016
2017
2018
EXHIBIT 2
NONE-COMMERCERETAILANDECOMMERCE(BILLION$)
$6.000,0
$5.000,0
$4.000,0
$3.000,0
$2.000,0
$4.740,70
$4.898,20
$5.060,50
$4.125,00
$4.269,50
$4.428,20
$4.588,50
$226,9
$264,3
$304,9
$347,3
$392,5
$440,4
$491,5
2012
2013
2014
2015
2016
2017
2018
$1.000,0
$-
E-Commerce
Non-ERetail
15
EXHIBIT 3
M-COMMERCEINE-COMMERCE
100%
90%
80%
70%
60%
$202,12
50%
$222,17
$247,11
$270,89
$294,38
$325,90
$358,81
$42,13
$57,79
$76,41
$98,12
$114,50
$132,69
2013
2014
2015
2016
2017
2018
40%
30%
20%
10%
$24,78
0%
2012
11%
16%
19%
M-Commerce
22%
25%
26%
27%
E-Com(NonM-Com)
EXHIBIT 4: Amazon sales and sales growth by region
AmazonUSandInternationalSalesandGrowth
$60.000
100%
$50.000
80%
$40.000
60%
$30.000
40%
$20.000
20%
$10.000
$0
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
USrevenues
InternationalRevenues
USGrowth
InternationalGrowth
Source: CapIQ Financial statements 2000-2014 actuals
16
EXHIBIT 5: Amazon FCF and breakdown
8.000,0
7.000,0
6.000,0
5.000,0
4.000,0
3.000,0
2.000,0
1.000,0
0
(1.000,0)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CFO
CAPEX
FCF
Depreciation
Source: CapIQ Financial statements 2000-2014 actuals
EXHIBIT 6: Amazon Cash Conversion Cycle trends
WorkingCapitalandOCF
8.000,0
0
6.000,0
(10,0)
4.000,0
(20,0)
2.000,0
(30,0)
0
(40,0)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(2.000,0)
(50,0)
OCFlessworkingcapital
WorkingCapitalImpactonOCF
AverageCashConversionCycle
Source: CapIQ Financial statements 2000-2014 actuals
17
EXHIBIT 7: Amazon ROIC
60%
40%
20%
0%
AMZN
-20%
Source: CapIQ Financial statements 2000-2014 actuals
EXHIBIT 8
ANNUALDIVIDEND
$2,50
$2,00
$1,50
$1,00
$0,50
$2006
2008
2010
2012
2014
2015
18
EXHIBIT 9
NETSALESBYSEGMENT
300.000,0
250.000,0
200.000,0
Walmart UnitedStates(U.S.)
150.000,0
Walmart International
Sam'sClub
100.000,0
50.000,0
0
2010
2011
2012
2013
204
2015
EXHIBIT 10
USGrocerystoresales($billion)
700
600
500
400
300
200
441,14 457,67
471,7
549,11
491,36 511,39 510,33 521,23
565,6
579,01
594,4
2012
2013
2014
100
0
2004
2005
2006
2007
2008
2009
2010
2011
19
EXHIBIT 11
PROFITMARGIN
30,0%
25,0%
20,0%
GrossMargin%
15,0%
NetIncomeMargin%
10,0%
5,0%
0,0%
2010
2011
2012
2013
2014
2015
EXHIBIT 12
RATIOS
25,0%
20,0%
ROA
15,0%
ROC
10,0%
ROE
5,0%
0,0%
2010
2011
2012
2013
2014
2015
EXHIBIT 13
EnterpriseValue
Debt
Cash
EquityValue
SharesOutstanding
$20.099.088
$173.123
$9.135
$19.935.100
321000
SharePrice $62,10
20
INCOMESTATEMENT
Revenue
Brick-MortarStores
E-Commerce
TotalRevenue
CostOfGoodsSold
GrossProfit
SellingGeneral&AdminExp.
R&DExp.
Depreciation&Amort.
OtherOperatingExp.,Total
2013
2014
468.651,0 476.294,0
464.329,1
11.964,9
468.651,0 476.294,0
352.297,0 358.069,0
116.354,0 118.225,0
88.629,0 91.353,0
88.629,0 91.353,0
2015
485.651,0
470.459,8
15.191,2
485.651,0
365.086,0
120.565,0
93.418,0
93.418,0
2016
505.077
488.591,2
16.485,8
505.077,0
379.692,2
125.384,9
96.524,8
96.524,8
2017
525.280,1
507.963,1
17.317,0
525.280,1
394.879,9
130.400,3
100.385,8
100.385,8
2018
551.544,1
533.359,6
18.184,5
551.544,1
414.623,9
136.920,3
105.405,1
105.405,1
2019
579.121,3
560.027,1
19.094,2
579.121,3
435.355,1
143.766,3
110.675,4
110.675,4
2020
608.077,4
588.028,4
20.049,0
608.077,4
457.122,8
150.954,6
116.209,2
116.209,2
2021
632.400,5
611.501,8
20.898,7
632.400,5
475.407,7
156.992,8
120.857,5
120.857,5
2022
657.696,5
635.949,9
21.746,6
657.696,5
494.424,0
163.272,5
125.691,8
125.691,8
2023
684.004,4
661.384,9
22.619,5
684.004,4
514.201,0
169.803,4
130.719,5
130.719,5
2024
711.364,6
687.839,6
23.525,0
711.364,6
534.769,0
176.595,5
135.948,3
135.948,3
2025
739.819,1
715.352,9
24.466,2
739.819,1
556.159,8
183.659,3
141.386,2
141.386,2
2026
769.411,9
743.967,0
25.444,9
769.411,9
578.406,2
191.005,7
147.041,7
147.041,7
OperatingIncome
InterestExpense
InterestandInvest.Income
NetInterestExp.
EarningsBeforeTaxses
IncomeTaxExpense
MinorityInt.inEarnings
NetIncome
27.725,0
(2.249,0) 186,0
(2.063,0) 25.662,0
7.958,0
(757,0) 16.999,0
27.147,0
(2.461,0) 113,0
(2.348,0) 24.799,0
7.985,0
(736,0) 16.363,0
28.860,0
(2.471,9) 140,9
(2.331,0) 31.191,0
10.043,2
(588,0) 20.559,9
30.014,4
(2.475,3) 168,7
(2.306,5) 27.707,9
8.921,6
(682,1) 18.104,2
31.515,1
(2.479,7) 196,6
(2.283,1) 29.232,1
9.412,4
(791,2) 19.028,5
33.090,9
(2.484,3) 224,5
(2.259,8) 30.831,1
9.927,3
(917,8) 19.986,0
34.745,4
(2.489,2) 252,3
(2.236,8) 32.508,6
10.467,4
(1.064,7) 20.976,5
36.135,3
(2.493,2) 280,2
(2.213,0) 33.922,2
10.922,6
(1.235,0) 21.764,6
37.580,7
(2.497,5) 308,1
(2.189,4) 35.391,3
11.395,6
(1.432,6) 22.563,1
39.083,9
(2.501,9) 335,9
(2.166,0) 36.917,9
11.887,2
(1.661,8) 23.369,0
40.647,2
(2.506,5) 363,8
(2.142,7) 38.504,6
12.398,0
(1.927,7) 24.178,8
42.273,1
(2.511,3) 391,7
(2.119,6) 40.153,5
12.929,0
(2.236,1) 24.988,4
43.964,1
(2.516,2) 419,5
(2.096,7) 41.867,4
13.480,8
(2.593,9) 25.792,6
2016
Balance Sheet
26.872,0
(2.335,0) 119,0
(2.216,0) 24.656,0
8.105,0
(673,0) 16.022,0
2013
2014
2015
Cash And Equivalents
Trading Asset Securities
Accounts Receivable
Inventory
Prepaid Exp.
Deferred Tax Assets, Curr.
Other Current Assets
Total Current Assets
7.781,0
29,0
6.768,0
43.803,0
1.002,0
520,0
37,0
59.940,0
7.281,0
5,0
6.677,0
44.858,0
1.082,0
822,0
460,0
61.185,0
9.135,0
6.778,0
45.141,0
1.496,0
728,0
0
63.278,0
9.500,4
18,0
6.918,9
45.771,1
1.263,9
550,8
175,5
64.198,5
9.880,4
18,7
7.195,6
47.602,0
1.314,5
572,8
182,5
66.766,5
10.374,4
19,7
7.555,4
49.982,1
1.380,2
601,4
191,6
70.104,8
10.893,2
20,6
7.933,2
52.481,2
1.449,2
631,5
201,2
73.610,1
11.437,8
21,7
8.329,8
55.105,2
1.521,7
663,1
211,3
77.290,6
11.895,3
22,5
8.663,0
57.309,4
1.582,6
689,6
219,7
80.382,2
12.371,1
23,4
9.009,5
59.601,8
1.645,9
717,2
228,5
83.597,5
12.866,0
24,4
9.369,9
61.985,9
1.711,7
745,9
237,6
86.941,4
13.380,6
25,4
9.744,7
64.465,3
1.780,2
775,7
247,1
90.419,0
13.915,9
26,4
10.134,5
67.043,9
1.851,4
806,7
257,0
94.035,8
14.472,5
27,4
10.539,9
69.725,7
1.925,4
839,0
267,3
97.797,2
Gross Property, Plant & Equipment
Accumulated Depreciation
Net Property, Plant & Equipment
Long-term Investments
Goodwill
Other Intangibles
Deferred Tax Assets, LT
Other Long-Term Assets
Total Assets
171.724,0
(55.043,0)
116.681,0
581,0
20.497,0
0
757,0
4.649,0
203.105,0
178.678,0
(60.771,0)
117.907,0
716,0
19.510,0
0
1.151,0
4.282,0
204.751,0
182.634,0
(65.979,0)
116.655,0
512,0
18.102,0
419,0
1.033,0
3.707,0
203.706,0
200.287,02
(68.308,3)
131.978,7
649,9
20.875,2
150,5
1.056,5
4.540,1
223.449,5
218.469,63
(74.509,5)
143.960,1
675,9
21.710,2
156,5
1.098,8
4.721,7
239.089,7
237.197,72
(80.896,8)
156.301,0
709,7
22.795,7
164,4
1.153,7
4.957,8
256.187,0
256.487,65
(87.475,6)
169.012,0
745,1
23.935,5
172,6
1.211,4
5.205,7
273.892,4
276.356,28
(94.251,9)
182.104,4
782,4
25.132,3
181,2
1.272,0
5.466,0
292.228,8
296.820,97
(101.231,4)
195.589,6
813,7
26.137,5
188,5
1.322,9
5.684,6
310.118,9
317.899,60
(108.420,3)
209.479,3
846,2
27.183,0
196,0
1.375,8
5.912,0
328.589,8
339.610,59
(115.824,9)
223.785,7
880,1
28.270,4
203,8
1.430,8
6.148,5
347.660,7
361.972,90
(123.451,6)
238.521,3
915,3
29.401,2
212,0
1.488,0
6.394,4
367.351,3
385.006,09
(131.307,1)
253.699,0
951,9
30.577,2
220,5
1.547,6
6.650,2
387.682,1
408.730,27
(139.398,3)
269.332,0
990,0
31.800,3
229,3
1.609,5
6.916,2
408.674,5
Accounts Payable
Accrued Exp.
Short-term Borrowings
Curr. Port. of LT Debt
Curr. Port. of Cap. Leases
Curr. Income Taxes Payable
Other Current Liabilities
Total Current Liabilities
38.080,0
18.804,0
6.805,0
5.591,0
327,0
2.211,0
0
71.818,0
37.415,0
18.793,0
7.670,0
4.103,0
309,0
966,0
89,0
69.345,0
38.410,0
19.152,0
1.592,0
4.810,0
287,0
1.021,0
0
65.272,0
39.529,6
19.918,1
1.655,7
4.958,9
241,2
1.753,2
0
68.056,7
41.110,8
20.714,8
1.721,9
4.958,9
218,2
1.557,4
0
70.282,0
43.166,3
21.750,5
1.808,0
4.958,9
197,5
1.643,1
0
73.524,4
45.324,6
22.838,1
1.898,4
4.958,9
179,5
1.733,0
0
76.932,5
47.590,9
23.980,0
1.993,3
4.958,9
197,5
1.827,3
0
80.547,8
49.494,5
24.939,2
2.073,1
4.958,9
217,2
1.906,7
0
83.589,6
51.474,3
25.936,7
2.156,0
4.958,9
238,9
1.989,3
0
86.754,2
53.533,3
26.974,2
2.242,2
4.958,9
262,8
2.075,1
0
90.046,6
55.674,6
28.053,2
2.331,9
4.958,9
289,1
2.164,3
0
93.472,0
57.901,6
29.175,3
2.425,2
4.958,9
318,0
2.257,0
0
97.036,0
60.217,6
30.342,3
2.522,2
4.958,9
349,8
2.353,3
0
100.744,2
Long-Term Debt
38.485,0
Additional Funds Needed
Capital Leases
3.023,0
Pension & Other Post-Retire. Benefits
684,0
Def. Tax Liability, Non-Curr.
4.373,0
Other Non-Current Liabilities
2.465,0
Total Liabilities 120.848,0
41.772,0
41.696,0
2.788,0
350,0
5.110,0
2.556,0
121.921,0
2.606,0
308,0
4.671,0
3.216,0
117.769,0
41.696,0
1.040,8
2.190,0
308,0
8.836,0
2.610,8
124.738,4
41.696,0
3.086,7
1.981,0
308,0
9.085,0
2.715,3
129.154,0
41.696,0
4.947,3
1.793,0
308,0
9.334,0
2.851,0
134.453,7
41.696,0
6.617,8
1.630,0
308,0
9.589,8
2.993,6
139.767,7
41.696,0
7.757,9
1.793,0
308,0
9.852,7
3.143,3
145.098,7
41.696,0
8.537,1
1.972,3
308,0
10.122,7
3.269,0
149.494,7
41.696,0
9.248,9
2.169,5
308,0
10.400,1
3.399,7
153.976,5
41.696,0
9.900,6
2.386,5
308,0
10.685,2
3.535,7
158.558,6
41.696,0
10.502,0
2.625,1
308,0
10.978,0
3.677,2
163.258,3
41.696,0
11.065,6
2.887,6
308,0
11.278,9
3.824,3
168.096,4
41.696,0
11.607,4
3.176,4
308,0
11.588,1
3.977,2
173.097,3
323,0
2.362,0
76.566,0
(2.996,0)
76.255,0
323,0
2.462,0
85.777,0
(7.168,0)
81.394,0
323,0
2.462,0
98.524,1
0
(7.168,0)
94.141,1
323,0
2.462,0
109.748,7
0
(7.168,0)
105.365,7
323,0
2.462,0
121.546,3
0
(7.168,0)
117.163,3
323,0
2.462,0
133.937,7
0
(7.168,0)
129.554,7
323,0
2.462,0
146.943,1
0
(7.168,0)
142.560,1
323,0
2.462,0
160.437,2
0
(7.168,0)
156.054,2
323,0
2.462,0
174.426,3
0
(7.168,0)
170.043,3
323,0
2.462,0
188.915,0
0
(7.168,0)
184.532,0
323,0
2.462,0
203.905,9
0
(7.168,0)
199.522,9
323,0
2.462,0
219.398,7
0
(7.168,0)
215.015,7
323,0
2.462,0
235.390,2
0
(7.168,0)
231.007,2
Common Stock
Additional Paid In Capital
Retained Earnings
Treasury Stock
Comprehensive Inc. and Other
Total Common Equity
Minority Interest
2018
2019
2020
2021
2022
2023
2024
2025
2026
5.914,0
6.575,0
4.543,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
4.570,0
82.257,0
82.830,0
85.937,0
98.711,1
109.935,7
121.733,3
134.124,7
147.130,1
160.624,2
174.613,3
189.102,0
204.092,9
219.585,7
235.577,2
Total Liabilities And Equity 203.105,0
204.751,0
203.706,0
223.449,5
239.089,7
256.187,0
273.892,4
292.228,8
310.118,9
328.589,8
347.660,7
367.351,3
387.682,1
408.674,5
Total Equity
332,0
3.620,0
72.978,0
(587,0)
76.343,0
2017
21
CASHFLOWSTATEMENT
2014
2015
2016
$ 16.022,00
$ 16.363,00
$ 20.559,86
$
Depreciation & Amortization
$ 115.814,00
$ 126.750,00
$ 134.287,29
$ 142.817,80
Change in Accounts Receivable
$
91,00
$
-101,00
$
-140,86
$
-276,75
$
-359,78
$
-377,77
$
-396,66
$
-333,19
$
-346,52
$
-360,38
$
-374,80
$
-389,79
Change in Inventory
$
-1.055,00
$
-283,00
$
-630,11
$
-1.830,84
$
-2.380,10
$
-2.499,10
$
-2.624,06
$
-2.204,21
$
-2.292,38
$
-2.384,07
$
-2.479,43
$
-2.578,61
Change in Prepaid Exp.
$
-80,00
$
-414,00
$
232,07
$
-50,56
$
-65,72
$
-69,01
$
-72,46
$
-60,87
$
-63,30
$
-65,83
$
-68,47
$
-71,21
Change in Deferred Tax Assets, Curr. $
-302,00
$
94,00
$
177,24
$
-22,03
$
-28,64
$
-30,07
$
-31,58
$
-26,52
$
-27,58
$
-28,69
$
-29,84
$
Net Income
2017
2018
18.104,17
$
2019
19.028,45
$ 155.406,27
$
2020
19.986,00
$ 168.372,39
$
2021
20.976,55
$ 181.727,49
$
2022
21.764,64
$ 195.483,25
$
2023
22.563,06
$ 209.651,69
$
2024
23.368,95
$ 224.245,17
$
2025
24.178,82
$ 239.276,46
$
24.988,41
$ 254.758,69
-31,03
Change in Other Current Assets
$
-423,00
$
460,00
$
-175,47
$
-7,02
$
-9,12
$
-9,58
$
-10,06
$
-8,45
$
-8,79
$
-9,14
$
-9,51
$
-9,89
Change in Income Taxes
$
-1.245,00
$
-2.093,00
$
-920,54
$
-2.567,94
$
-3.338,32
$
-3.505,24
$
-3.680,50
$
-3.091,62
$
-3.215,29
$
-3.343,90
$
-3.477,65
$
-3.616,76
Change in Accounts Payable
$
-665,00
$
995,00
$
1.119,60
$
1.581,18
$
2.055,54
$
2.158,32
$
2.266,23
$
1.903,63
$
1.979,78
$
2.058,97
$
2.141,33
$
2.226,98
$
$
Change in Accrued Exp.
-11,00
$
359,00
766,08
$
796,72
$
1.035,74
$
1.087,53
$
1.141,90
959,20
$
997,57
$
1.037,47
$
1.078,97
$
1.122,13
Change in Short-term Borrowings
$
865,00
$
-6.078,00
$
63,68
$
66,23
$
86,10
$
90,40
$
94,92
$
79,73
$
82,92
$
86,24
$
89,69
$
93,28
Change in Curr. Port. of LT Debt
$
$
-1.488,00
$
707,00
$
148,95
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Change in Curr. Port. of Cap. Leases
$
-18,00
$
-22,00
$
-45,81
$
-23,02
$
-20,70
$
-17,95
$
17,95
$
19,75
$
21,72
$
23,89
$
26,28
$
28,91
Change in Curr. Income Taxes Payable$
-1.245,00
$
55,00
$
732,21
$
-195,78
$
85,67
$
89,88
$
94,29
$
79,46
$
85,81
$
89,18
$
92,69
$
-89,00
$
-
$
-
$
-
$
-
Change in Other Current Liabilities
$
89,00
Operating Cash Flow $ 126.349,00
$ 136.703,00
$
-
$ 156.174,17
$
-
$ 158.392,16
$ 171.495,37
$ 185.275,78
$ 199.504,03
$
-
$ 214.564,80
$
82,57
$
-
$ 229.425,45
$ 244.714,50
$
$
-
-
$ 260.441,04
$
-
$
-
$ 276.613,81
Investment in PP&E
$-6.954,00 $-3.956,00 $-17.653,02 $-18.182,61 $-18.728,09 $-19.289,93 $-19.868,63 $-20.464,69 $-21.078,63 $-21.710,99 $-22.362,32 $-23.033,19
InvestmentinOtherLong-termAssets$367,00 $575,00 $-833,10 $-181,60 $-236,09 $-247,89 $-260,28 $-218,64 $-227,38 $-236,48 $-245,94 $-255,78
InvestmentInGoodwill&Intangibles $987,00 $989,00 $-2.504,70 $-841,03 $-1.093,34 $-1.148,00 $-1.205,40 $-1.012,54 $-1.053,04 $-1.095,16 $-1.138,97 $-1.184,53
Investing Cash Flow $
-5.600,00
$
2.411,00
Debt Issuance
Retirement of Debt
Dividends
$
Financing Cash Flow
Free Cash Flow
$
2.411,00
$123.160,00
$
-2.392,00
$ -20.990,82
$
-19.205,24
$
-20.057,51
$
-20.685,82
$
-5.651,00
$
-249,18
$
-165,79
$
-122,61
$
-90,55
$
-21.334,32
$
-21.695,87
$
-22.359,05
$
-23.042,63
$
-23.747,22
$
-24.473,49
$
275,87
$
278,78
$
301,87
$
327,09
$
354,62
$
$
-6.218
$
-7.813
$
-6.880
$
-7.231
$
384,70
-7.595
$
-7.971
$
-8.271
$
-8.574
$
-8.880
$
-9.188
$
$ -11.868,94
$
-8.061,93
$
-7.045,38
$
-7.353,42
$
-9.496
-7.685,23
$
-7.695,22
$
-7.991,78
$
-8.272,09
$
-8.553,12
$
-8.833,33
$
-9.110,90
$122.442,06
$127.121,42 $132.141,54 $144.084,44 $156.904,72 $170.474,49 $184.877,15 $198.794,31 $213.118,75 $227.860,48 $243.029,42
REVENUEGROWTHbySEGMENT
900.000,0
25%
800.000,0
20%
700.000,0
600.000,0
15%
500.000,0
E-Commerce
Brick&Mortar
E-Commerce Growth
400.000,0
10%
Brick&MortarGrowth
300.000,0
200.000,0
5%
100.000,0
0
0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Pro-Forma with Revenue Growth stable at 3%, E-commerce yoy growth of 22%.
22
FreeCashFlow
$180.000,00
$160.000,00
$140.000,00
$120.000,00
$100.000,00
$80.000,00
$60.000,00
$40.000,00
$20.000,00
$2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Projected FCF, with Revenue Growth stable at 3%
EXHIBIT 14
REVENUEGROWTHbySEGMENT
900.000,0
30%
800.000,0
25%
700.000,0
600.000,0
20%
E-Commerce
500.000,0
15%
Brick&Mortar
E-Commerce Growth
400.000,0
Brick&MortarGrowth
300.000,0
10%
200.000,0
5%
100.000,0
0
0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
23
EXHIBIT 15: Amazon Forecasted Income Statement and Balance Sheet
FORECAST
2015E
2016F
2017F
2018F
2019F
ESTIMATES
2020F
2021F
2022F
2023F
2024F
2025F
Sales
Sales&growth
Media
YoY#Growth#%
Electronics
YoY#Growth#%
AWS&and&other&
Business&lines
YoY#Growth#%
$99 9106,306
19%
&&&& &23,292.7
3.50%
&&&& &75,145.1
23.42%
$999 9126,742
19%
&&&& &24,107.9
3.50%
&&&& &91,735.2
22.08%
$999 9150,581
19%
&&&& &24,951.7
3.50%
&& &110,756.9
20.74%
$999 9178,051
18%
&&&& &25,825.0
3.50%
&& &132,236.6
19.39%
$999 9209,292
18%
&&&& &26,728.9
3.50%
&& &156,107.5
18.05%
$999 9244,326
17%
&&&& &27,664.4
3.50%
&& &182,192.5
16.71%
$999 9283,024
16%
&&&& &28,632.6
3.50%
&& &210,191.4
15.37%
$999 9325,075
15%
&&&& &29,634.8
3.50%
&& &239,672.4
14.03%
$999 9369,961
14%
&&&& &30,672.0
3.50%
&& &270,072.1
12.68%
$999 9416,933
13%
&&&& &31,745.5
3.50%
&& &300,703.5
11.34%
$999 9465,012
12%
&&&& &32,856.6
3.50%
&& &330,773.9
10.00%
&&&&&& &7,868.1
40.58%
&&&& &10,898.9
38.52%
&&&& &14,872.8
36.46%
&&&& &19,989.7
34.40%
&&&& &26,455.6
32.35%
&&&& &34,468.7
30.29%
&&&& &44,199.5
28.23%
&&&& &55,767.9
26.17%
&&&& &69,216.6
24.12%
&&&& &84,484.2
22.06%
&& &101,381.1
20.00%
COGS
COGS#(%#sales)
$&&&&& &69,962
66%
$&&&&& &83,412
66%
$&&&&& &99,101
66%
$&&& &117,180
66%
$&&& &137,740
66%
$&&& &160,796
66%
$&&& &186,264
66%
$&&& &213,939
66%
$&&& &243,479
66%
$&&& &274,393
66%
$&&& &306,035
66%
SG&A
SG&A#(%#sales)
R&D
R&D#(%#sales)
$&&&&& 19,609
&
18.45%
$&&&&& &10,804
10.16%
$&&&&& &23,044
18.18%
$&&&&& &12,552
9.90%
$&&&&& &26,980
17.92%
$&&&&& &14,522
9.64%
$&&&&& &31,431
17.65%
$&&&&& &16,708
9.38%
$&&&&& &36,393
17.39%
$&&&&& &19,097
9.12%
$&&&&& &41,839
17.12%
$&&&&& &21,659
8.86%
$&&&&& &47,718
16.86%
$&&&&& &24,354
8.60%
$&&&&& &53,948
16.60%
$&&&&& &27,129
8.35%
$&&&&& &60,419
16.33%
$&&&&& &29,914
8.09%
$&&&&& &66,989
16.07%
$&&&&& &32,629
7.83%
$&&&&& &73,484
15.80%
$&&&&& &35,184
7.57%
Depreciation&&&
D&A#(%#sales)
EBIT
EBIT#(%#sales)
$&&&&&&& &6,100
5.7%
$999999999 9(170)
F0.2%
$&&&&&&&& &7,299
5.8%
$99999999999 9436
0.3%
$&&&&&&&& &9,584
6.4%
$99999999999 9395
0.3%
$&&&&& &11,751
6.6%
$99999999999 9981
0.6%
$&&&&& &12,100
5.8%
$99999999 93,962
1.9%
$&&&&& &11,149
4.6%
$99999999 98,883
3.6%
$&&&&& &12,579
4.4%
$99999 912,108
4.3%
$&&&&& &15,726
4.8%
$99999 914,333
4.4%
$&&&&& &17,592
4.8%
$99999 918,556
5.0%
$&&&&& &19,481
4.7%
$99999 923,442
5.6%
$&&&&& &21,343
4.6%
$99999 928,966
6.2%
EBITDA
EBITDA#(%#sales)
$&&&&&&& &5,930
5.6%
$&&&&&&&& &7,735
6.1%
$&&&&&&&& &9,979
6.6%
$&&&&& &12,732
7.2%
$&&&&& &16,063
7.7%
$&&&&& &20,032
8.2%
$&&&&& &24,687
8.7%
$&&&&& &30,059
9.2%
$&&&&& &36,148
9.8%
$&&&&& &42,923
10.3%
$&&&&& &50,309
10.8%
Interest&Expense
Interest#Income#(%#
Interest&Income
Interest#Income#(%#
EBT
EBT#(%#sales)
$&&&&&&&&& &(172)
F3.31%
$&&&&&&&&&&&& & 33
0.24%
$999999999 9(374)
F0.35%
$&&&&&&&&&& &(198)
F3.31%
$&&&&&&&&&&&&& &35
0.26%
$99999999999 9203
0.16%
$&&&&&&&&&& &(242)
F3.31%
$&&&&&&&&&&&&& &38
0.28%
$99999999999 9115
0.08%
$&&&&&&&&&& &(310)
F3.31%
$&&&&&&&&&&&&& &42
0.30%
$99999999999 9629
0.35%
$&&&&&&&&&& &(409)
F3.31%
$&&&&&&&&&&&&& &54
0.31%
$99999999 93,500
1.67%
$&&&&&&&&&& &(549)
F3.31%
$&&&&&&&&&&&&& &78
0.33%
$99999999 98,256
3.38%
$&&&&&&&&&& &(726)
F3.31%
$&&&&&&&&&&& &112
0.35%
$99999 911,270
3.98%
$&&&&&&&&&& &(946)
F3.31%
$&&&&&&&&&&& &156
0.37%
$99999 913,230
4.07%
$&&&&&& &(1,217)
F3.31%
$&&&&&&&&&&& &215
0.38%
$99999 917,124
4.63%
$&&&&&& &(1,547)
F3.31%
$&&&&&&&&&&& &293
0.40%
$99999 921,602
5.18%
$&&&&&& &(1,943)
F3.31%
$&&&&&&&&&&& &393
0.42%
$99999 926,630
5.73%
Taxes
Net9Income9
Tax#rate
(excluding9unusual9
items)
$&&&&&&&&& &(112)
30.0%
$&&&&&&&&&&&&& &61
30.0%
$&&&&&&&&&&&&& &34
30.0%
$&&&&&&&&&&& &189
30.0%
$&&&&&&&& &1,050
30.0%
$&&&&&&&& &2,477
30.0%
$&&&&&&&& &3,381
30.0%
$&&&&&&&& &3,969
30.0%
$&&&&&&&& &5,137
30.0%
$&&&&&&&& &6,481
30.0%
$&&&&&&&& &7,989
30.0%
$999999999 9(262)
$99999999999
$9999999999999
$99999999999
$99999999 92,450
$99999999 95,780
$99999999 97,889
$99999999 99,261
$99999 911,987
$99999 915,121
$99999 918,641
NI#(%#sales)
F0.2%
9142
0.1%
980
0.1%
9440
0.2%
1.2%
2.4%
2.8%
2.8%
3.2%
3.6%
4.0%
24
ESTIMATES
FORECAST
2015E
2016F
3315,419.33
3315,660.53
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
ASSETS
33Total3Cash3&3ST3Investments
As#a#%#of#sales
14.5%
3315,912.93
12.4%
3316,621.83
10.6%
3333319,458.73
9.3%
3333325,760.73
9.3%
3333334,320.23
10.5%
3333344,405.23
12.1%
3333357,366.93
13.7%
3333373,603.93
15.5%
3333393,480.63
17.7%
20.1%
Accounts(Receivable
33Total3Receivables
As#a#%#of#sales
333336,654.13
6.26%
333337,873.73
33339,283.83
6.21%
3310,893.73
6.17%
3333312,706.63
6.12%
3333314,718.63
6.07%
3333316,916.63
6.02%
3333319,277.23
5.98%
3333321,764.93
5.93%
3333324,332.13
5.88%
3333326,919.13
5.84%
5.79%
(((((9,875.9(
((11,729.3(
((13,882.3(
((16,352.4(
(((((19,148.7(
(((((22,269.7(
(((((25,699.9(
(((((29,407.8(
(((((33,343.4(
(((((37,437.2(
(((((41,599.5(
######## # 7.08
(((((((((((((((0(
######## # 7.11
(((((((((((((((0(
######## # 7.14
(((((((((((((((0(
######## # 7.17
(((((((((((((((0(
###########
#7.19
((((((((((((((((((0(
###########
#7.22
((((((((((((((((((0(
###########
#7.25
((((((((((((((((((0(
###########
#7.27
((((((((((((((((((0(
###########
#7.30
((((((((((((((((((0(
###########
#7.33
((((((((((((((((((0(
###########
#7.36
((((((((((((((((((0(
Deferred(Tax(Assets,(Curr.
(((((((((((((((0(
(((((((((((((((0(
(((((((((((((((0(
(((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
Other(Current(Assets
(((((((((((((((0(
(((((((((((((((0(
(((((((((((((((0(
(((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
33Total3Current3Assets
3331,949.43
3335,263.53
3339,079.03
3343,867.83
3333351,314.03
3333362,749.03
3333376,936.73
3333393,090.13
333112,475.23
333135,373.23
333161,999.23
Gross(Property,(Plant(&(Equipment
((25,437.3(
((28,547.5(
((31,662.2(
((34,988.3(
(((((39,581.5(
(((((46,230.3(
(((((53,866.1(
(((((61,729.1(
(((((70,524.9(
(((((80,265.2(
(((((90,936.7(
((5,757.4)((
((6,759.5)((
((7,906.5)((
((9,201.8)((
((10,643.4)((
((12,223.2)((
((13,925.4)((
((15,725.9)((
((17,591.6)((
((19,480.7)((
((21,343.0)((
<5.42%
(((((6,100.2(
<5.33%
(((((7,298.6(
<5.25%
((((9,583.7(
<5.17%
((11,751.3(
<5.09%
(((((12,100.4(
<5.00%
(((((11,148.9(
<4.92%
(((((12,579.0(
<4.84%
(((((15,725.9(
<4.75%
(((((17,591.6(
<4.67%
(((((19,480.7(
<4.59%
(((((21,343.0(
20.69%
(((((6,711.8(
20.50%
(((((7,801.9(
20.31%
((((8,643.3(
20.12%
(((((9,457.4(
3318,725.53
3320,745.63
Goodwill
(((((3,319.0(
Other(Intangibles
((((((((764.0(
Inventory
Inventory#turns
Prepaid(Exp.
CAPEX
%#of#sales
Depreciation
%#of#PPE
Accumulated(Depreciation
33Net3Property,3Plant3&3Equipment
((((((((((((((((((0(
19.92%
(((((11,322.6(
19.73%
(((((15,060.4(
19.54%
(((((19,646.6(
19.35%
(((((24,377.5(
19.16%
(((((30,027.4(
18.97%
(((((36,688.1(
18.78%
(((((44,435.6(
3323,018.93
3325,530.93
3333328,258.93
3333331,169.83
3333334,219.53
3333337,351.63
3333340,497.43
3333343,577.13
3333346,501.23
(((((3,319.0(
((((3,319.0(
(((((3,319.0(
(((((((3,319.0(
(((((((3,319.0(
(((((((3,319.0(
(((((((3,319.0(
(((((((3,319.0(
(((((((3,319.0(
(((((((3,319.0(
((((((((764.0(
((((((((764.0(
((((((((764.0(
LongSterm(Investments
Deferred(Tax(Assets,(LT
Deferred(Charges,(LT
Other(LongSTerm(Assets
As#a#%#of#sales
Total3Assets
(((((((((((((((0(
(((((((((((((((0(
(((((2,446.0(
2.30%
3357,203.93
(((((((((((((((0(
(((((((((((((((0(
(((((2,857.2(
2.25%
3362,949.33
(((((((((((((((0(
(((((((((((((((0(
((((3,324.5(
2.21%
3369,505.53
(((((((((((((((0(
(((((((((((((((0(
((((((((((764.0(
((((((((((764.0(
((((((((((764.0(
((((((((((764.0(
((((((((((764.0(
((((((((((764.0(
((((((((((764.0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
((((((((((((((((((0(
(((((((4,425.8(
(((((((5,052.9(
(((((((5,721.4(
(((((((6,420.1(
(((((((7,134.3(
(((((((7,846.0(
(((((((8,534.2(
2.16%
3377,329.93
2.11%
3333388,081.73
2.07%
333103,054.73
2.02%
333120,960.63
1.97%
333140,944.83
1.93%
333164,189.93
1.88%
333190,879.33
1.84%
333221,117.53
((31,463.4(
(((((36,552.4(
(((((42,167.2(
(((((48,262.4(
(((((54,762.9(
(((((61,561.7(
(((((68,518.3(
(((((75,460.6(
######
#########
#########
#########
#########
#########
#########
#########
(((((3,848.1(
LIABILITIES
((22,919.2(
((26,919.7(
#### #101.44
#### #100.29
######
(((((5,384.0(
(((((6,418.8(
((((7,625.9(
(((((9,016.9(
Curr.(Port.(of(LT(Debt
5.06%
((((((((750.0(
5.06%
((((((((751.0(
5.06%
((((((((752.0(
5.06%
((((((((753.0(
5.06%
((((((((((754.0(
5.06%
((((((((((755.0(
5.06%
((((((((((756.0(
Curr.(Port.(of(Cap.(Leases
(((((1,024.4(
(((((1,024.4(
((((1,024.4(
(((((1,024.4(
(((((((1,024.4(
Unearned(Revenue,(Current
(((((4,133.5(
(((((4,838.7(
((((5,642.5(
(((((6,546.1(
Accounts(Payable
Deferral#period
Accrued(Exp.
As#a#%#of#sales
((19,442.9(
#99.15
# 98.00
#96.86
(((((10,598.7(
#95.72
(((((12,372.4(
#94.57
(((((14,331.7(
#93.43
(((((16,460.7(
5.06%
((((((((((757.0(
#92.29
(((((18,733.0(
5.06%
((((((((((758.0(
#91.14
(((((21,110.9(
5.06%
((((((((((759.0(
#90.00
(((((23,544.7(
5.06%
((((((((((760.0(
(((((((1,024.4(
(((((((1,024.4(
(((((((1,024.4(
(((((((1,024.4(
(((((((1,024.4(
(((((((1,024.4(
(((((((7,546.9(
(((((((8,637.7(
(((((((9,805.9(
(((((11,033.4(
(((((12,295.6(
(((((13,562.3(
(((((14,797.9(
Other(Current(Liabilities
3.89%
(((((((((((((((0(
3.82%
(((((((((((((((0(
3.75%
(((((((((((((((0(
3.68%
(((((((((((((((0(
3.61%
((((((((((((((((((0(
3.54%
((((((((((((((((((0(
3.46%
((((((((((((((((((0(
3.39%
((((((((((((((((((0(
3.32%
((((((((((((((((((0(
3.25%
((((((((((((((((((0(
33Total3Current3Liabilities
3330,734.83
3335,952.13
3341,964.53
3348,803.83
3333356,476.43
3333364,956.73
3333374,180.43
3333384,038.33
3333394,372.63
333104,974.93
333115,587.53
(((((8,265.0(
(((((8,265.0(
((((8,265.0(
(((((8,265.0(
(((((((8,265.0(
(((((((8,265.0(
(((((((8,265.0(
(((((((8,265.0(
(((((((8,265.0(
(((((((8,265.0(
(((((((8,265.0(
7.77%
(((((4,224.0(
6.52%
(((((4,224.0(
5.49%
((((4,224.0(
4.64%
(((((4,224.0(
3.95%
(((((((4,224.0(
3.38%
(((((((4,224.0(
2.92%
(((((((4,224.0(
2.54%
(((((((4,224.0(
2.23%
(((((((4,224.0(
1.98%
(((((((4,224.0(
1.78%
(((((((4,224.0(
3.97%
(((((((((((((((0(
3.77%
(((((((((((((((0(
3.56%
(((((((((((((((0(
3.35%
(((((((((((((((0(
3.15%
((((((((((((((((((0(
2.94%
((((((((((((((((((0(
2.74%
((((((((((((((((((0(
2.53%
((((((((((((((((((0(
2.32%
((((((((((((((((((0(
2.12%
((((((((((((((((((0(
1.91%
((((((((((((((((((0(
As#a#%#of#sales
LongSTerm(Debt
As#a#%#of#sales
Capital(Leases
As#a#%#of#sales
Unearned(Revenue,(NonSCurrent
3.18%
((((((((((((((((((0(
Def.(Tax(Liability,(NonSCurr.
((((((((928.2(
((((((((835.4(
((((((((742.5(
((((((((649.7(
((((((((((556.9(
((((((((((464.1(
((((((((((371.3(
((((((((((278.5(
((((((((((185.6(
((((((((((((92.8(
Other(NonSCurrent(Liabilities
(((((2,575.9(
(((((3,058.6(
((((3,619.1(
(((((4,261.9(
(((((((4,989.1(
(((((((5,800.2(
(((((((6,691.1(
(((((((7,653.3(
(((((((8,673.7(
(((((((9,734.0(
(((((10,810.7(
2.38%
3333374,511.43
2.37%
3333383,710.03
2.36%
3333393,731.83
2.35%
333104,459.13
2.34%
333115,721.03
2.33%
333127,290.73
2.32%
333138,887.33
As#a#%#of#sales
Total3Liabilities
Common(Stock
Additional(Paid(In(Capital
Retained(Earnings
2.42%
3346,727.93
((((((((((((5.0(
2.41%
3352,335.23
2.40%
3358,815.33
2.39%
3366,204.43
((((((((((((5.0(
((((((((((((((5.0(
((((((((((((((5.0(
((((((((((((((5.0(
((((((((((((((5.0(
((((((((((((((5.0(
((((((((((((((5.0(
((((((((((((((0.0(
((((((((((((5.0(
((((((((((((5.0(
((11,135.0(
((11,135.0(
((11,135.0(
((11,135.0(
(((((11,135.0(
(((((11,135.0(
(((((11,135.0(
(((((11,135.0(
(((((11,135.0(
(((((11,135.0(
(((((11,135.0(
(((((1,684.0(
(((((1,822.2(
((((1,898.2(
(((((2,333.5(
(((((((4,778.3(
(((((10,552.6(
(((((18,436.8(
(((((27,693.7(
(((((39,676.9(
(((((54,796.6(
(((((73,438.2(
((((((((((((((5.0(
Treasury(Stock
((1,837.0)((
((1,837.0)((
((1,837.0)((
((1,837.0)((
((((1,837.0)((
((((1,837.0)((
((((1,837.0)((
((((1,837.0)((
((((1,837.0)((
((((1,837.0)((
((((1,837.0)((
Comprehensive(Inc.(and(Other
(((((511.0)((
(((((511.0)((
(((((511.0)((
(((((511.0)((
((((((((511.0)((
((((((((511.0)((
((((((((511.0)((
((((((((511.0)((
((((((((511.0)((
((((((((511.0)((
((((((((511.0)((
33Total3Common3Equity
3310,476.03
3310,614.23
3310,690.23
3311,125.53
3333313,570.33
3333319,344.63
3333327,228.83
3333336,485.73
3333348,468.93
3333363,588.63
Total3Equity
3310,476.03
3310,614.23
3310,690.23
3311,125.53
3333313,570.33
3333319,344.63
3333327,228.83
3333336,485.73
3333348,468.93
3333363,588.63
3333382,230.23
Total3Liabilities3And3Equity
3357,203.93
3362,949.33
3369,505.53
3377,329.93
3333388,081.73
333103,054.73
333120,960.63
333140,944.83
333164,189.93
333190,879.33
333221,117.53
3333382,230.23
25
EXHIBIT16: Discounted Cash Flow and Valuation
ESTIMATES
FORECAST
2015E
Net$Income
2016F
$$$$$$(265.0)$$
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2024F
2025F
$$$$$$$$$$138.2$
$$$$$$$$$$$$76.0$
$$$$$$$$$$435.3$
$$$$$$$2,444.9$
$$$$$$$5,774.3$
$$$$$$$7,884.2$
$$$$$$$9,256.9$
$$$$$11,983.2$
$$$$$15,119.7$
$$$$$18,641.6$
Depreciation$&$Amort.,$Total
$$$$$$$6,100.2$
$$$$$$$7,298.6$
$$$$$$$9,583.7$
$$$$$11,751.3$
$$$$$12,100.4$
$$$$$11,148.9$
$$$$$12,579.0$
$$$$$15,725.9$
$$$$$17,591.6$
$$$$$19,480.7$
$$$$$21,343.0$
Depreciation$in$AR
$$$$$$$6,100.2$
$$$$$$$7,298.6$
$$$$$$$9,583.7$
$$$$$11,751.3$
$$$$$12,100.4$
$$$$$11,148.9$
$$$$$12,579.0$
$$$$$15,725.9$
$$$$$17,591.6$
$$$$$19,480.7$
$$$$$21,343.0$
Change$in$Acc.$Receivable
Change$In$Inventories
$$$(1,042.1)$$
$$$(1,576.9)$$
$$$(1,219.5)$$
$$$(1,853.4)$$
$$$(1,410.1)$$
$$$(2,153.0)$$
$$$(1,609.8)$$
$$$(2,470.1)$$
$$$(1,812.9)$$
$$$(2,796.3)$$
$$$(2,012.0)$$
$$$(3,120.9)$$
$$$(2,198.1)$$
$$$(3,430.2)$$
$$$(2,360.5)$$
$$$(3,707.9)$$
$$$(2,487.7)$$
$$$(3,935.6)$$
$$$(2,567.2)$$
$$$(4,093.8)$$
$$$(2,587.0)$$
$$$(4,162.3)$$
Change$in$Acc.$Payable
$$$$$$$2,983.9$
$$$$$$$3,476.3$
$$$$$$$4,000.5$
$$$$$$$4,543.7$
$$$$$$$5,089.0$
$$$$$$$5,614.8$
$$$$$$$6,095.2$
$$$$$$$6,500.6$
$$$$$$$6,798.7$
$$$$$$$6,956.6$
$$$$$$$6,942.3$
Change$in$Unearned$Rev.
$$$$$$$$$$610.5$
$$$$$$$$$$705.1$
$$$$$$$$$$803.8$
$$$$$$$$$$903.6$
$$$$$$$1,000.8$
$$$$$$$1,090.8$
$$$$$$$1,168.3$
$$$$$$$1,227.4$
$$$$$$$1,262.2$
$$$$$$$1,266.7$
$$$$$$$1,235.6$
Change$in$Other$Net$Operating$Assets
$$$$$$$1,644.9$
$$$$$$$1,928.8$
$$$$$$$2,235.0$
$$$$$$$2,557.2$
$$$$$$$2,886.7$
$$$$$$$3,212.0$
$$$$$$$3,518.6$
$$$$$$$3,789.9$
$$$$$$$4,006.9$
$$$$$$$4,149.9$
$$$$$$$4,198.7$
Cash6from6Operations
66666668,455.56
6666610,474.16
6666613,135.86
6666616,111.26
6666618,912.56
6666621,707.86
6666625,617.06
6666630,432.26
6666635,219.46
6666640,312.66
6666645,611.96
Capital6Expenditure
666(5,757.4)66
666(6,759.5)66
H5.42%
66666665,757.46
666(7,906.5)66
H5.33%
66666666,759.56
666(9,201.8)66
H5.25%
66666667,906.56
6(10,643.4)66
H5.17%
66666669,201.86
6(12,223.2)66
H5.09%
6666610,643.46
6(13,925.4)66
H5.00%
6666612,223.26
6(15,725.9)66
H4.92%
6666613,925.46
6(17,591.6)66
H4.84%
6666615,725.96
6(19,480.7)66
H4.75%
6666617,591.66
6(21,343.0)66
H4.67%
6666619,480.76
H4.59%
6666621,343.06
FCF$as$stated$in$annual$report
FCF
666 6 2,698.05
Discount)Factor
666 6 3,714.56
1.00
666 6 5,229.31
1.10
666 6 6,909.45
1.21
666 6 8,269.13
1.33
666 6 9,484.60
1.46
6 6 11,691.60
1.61
6 6 14,706.33
1.77
6 6 17,627.78
1.95
6 6 20,831.87
2.14
6 6 24,268.87
2.36
2.59
$ $ 406,421.5
Discounted6CF
66666
6 2,698.1
Entreprise6Value
6 6 215,022.6
O$Debt
$$$$$
+$Cash
$$$ $ 15,419.3
=Equity$Value
$ $ 222,176.9
/$Outstanding$diluted$shares
$$$$$$$$
$ 479.6
=6Share6Price
66666666
6 459.2
66666
6 3,376.9
66666
6 4,321.7
66666
6 5,191.2
66666
6 5,647.9
66666
6 5,889.2
66666
6 6,599.6
66666
6 7,546.7
66666
6 8,223.5
66666
6 8,834.7
66666
6 9,356.7
2015
$ 8,265.0
26
END-NOTES
1
2
3
http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756
World bank
4
http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756
Based on Amazon’s 2014 North America Sales (minus AWS) and a e-commerce US market of $307B
5
http://www.emarketer.com/Article/Internet-Hit-3-Billion-Users-2015/1011602
6
Market capitalization used Q2 1997: $441M; Market Cap Q3 2015: $234,348M; Source:Bloomberg
7
CapIQ, weighted average from 2000 to 2014 actuals of R&D line and CAPEX line
8
Represents all Amazon facilities in the world; Source: Amazon annual reports (2012, 2013, 2014)
9
Amazon annual reports (2012, 2013, 2014)
10
RBC Equity Research report on Amazon, September 11 2015
11
#1 in YouGov Brand Index, http://www.huffingtonpost.com/2014/01/13/amazon-vs-walmart_n_4589724.html
12
Amazon annual reports, excerpt from 1997 letter to shareholders
13
http://www.techrepublic.com/article/aws-now-10x-the-size-of-its-competitors-is-the-cloud-arms-race-over/
14
Amazon Q3 2015 report : « reflects additional investments in support of continued business
growth due to investments in technology infrastructure, the majority of which is to support AWS”,
http://recode.net/2015/04/23/how-amazons-cloud-business-is-growing/
15
https://www.forrester.com/The+Public+Cloud+Market+Is+Now+In+Hypergrowth/fulltext/-/ERES113365?intcmp=blog:forrlink
16
http://www.cnbc.com/2015/10/05/amazon-race-to-zero-with-microsoft-google.html
17
https://www.srgresearch.com/articles/aws-market-share-reaches-five-year-high-despite-microsoft-growth-surge
18
Amazon annual reports (2012, 2013, 2014)
19
Amazonannualreports(2013,2014)
20
Based on Close on Oct. 22nd and open on Oct 23rd of 2015; Source: Bloomberg
21
Amazon annual report 2014
22
Morningstar Equity Research, July 25th 2015 and The Guardian, June 2015 (Third-party sellers and Amazon - a
double-edged sword in e-commerce)
23
CapIQ Financial Statements of Amazon, 2001 to 2014 actuals
24
CapIQ Financial Statements of Amazon, 2001 to 2014 actuals
25
ROIC = (EBIT*(1-tax rate)) / Invested capital of prior year. Calculated on CapIQ Financial Statements of
Amazon, 2001 to 2014 actuals
26
http://www.statista.com/statistics/263265/top-companies-in-the-world-by-revenue/
27
http://corporate.walmart.com/_news_/news-archive/2014/02/20/walmart-raises-annual-dividend-to-192-per-sharerepresenting-the-41st-consecutive-year-of-dividend-increases
28
https://www.internetretailer.com/2015/10/14/wal-mart-will-spend-nearly-2-billion-web-imrovements
http://corporate.walmart.com/our-story/our-locations
30
2015 Walmart Annual Report
31
2015 Walmart Annual Report
32
2015 Walmart Annual Report
33
http://www.wsj.com/articles/wal-mart-to-open-115-stores-in-china-by-2017-1430270579
34
2015 Walmart Annual Report
35
http://money.cnn.com/2015/10/14/news/economy/china-middle-class-growing/
36
http://marketrealist.com/2015/08/walmarts-yihaodian-buyout-wmt-upped-ante-china/
37
http://marketrealist.com/2015/08/walmarts-yihaodian-buyout-wmt-upped-ante-china/
38
http://www.businessinsider.com/chinas-rising-middle-class-will-create-opportunities-the-world-has-never-seenbefore-2015-5?r=UK&IR=T
39
http://www.statista.com/statistics/323115/market-share-of-b2c-online-retailers-in-china/
40
http://growwithtrellis.com/blog/top-10-ecommerce-markets-by-country/
41
http://www.forbes.com/sites/dougyoung/2015/07/24/walmart-eyes-alibaba-amazon-with-china-buyout/
42
http://corporate.walmart.com/our-story/locations/nigeria#/nigeria
43
http://www.mckinsey.com/insights/africa/nigerias_renewal_delivering_inclusive_growth
44
http://www.nytimes.com/2015/06/06/business/walmart-lagging-in-online-sales-is-strengthening-ecommerce.html?_r=0
29
27
45
46
47
48
2015 Walmart Annual Report
http://www.theguardian.com/environment/2012/sep/05/climate-change-food-oxfam
http://www.cnbc.com/2015/05/08/amazons-grocery-delivery-business-quietly-expands-to-parts-of-new-jersey.html
2015 Walmart Annual Report
http://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=1303
50
https://ycharts.com/companies/AMZN/return_on_equity
51
2015 Walmart Annual Report
52
http://www.forbes.com/sites/stevedenning/2012/03/07/emulate-wal-mart-and-dare-to-be-bad/
49
53
54
http://www.forbes.com/sites/rahimkanani/2014/07/07/how-the-worlds-largest-company-thinks-about-social-responsibility/
http://s2.q4cdn.com/056532643/files/doc_financials/2015/annual/2015-annual-report.pdf
28