Question: Why Pay A Premium for AMZN?

[Update: I has the trailing earnings number wrong, so I updated the numbers including the closing stock price for today -- same conlcusion though!]
Using today's numbers (trailing earning of $0.59 per share, share price of $56.80), Amazon is trading at a PE of 96.

Yes, a PE of 96. Even GOOG doesn't sport a PE like that. That PE comes from the real definition of PE which looks at 12 month trailing earnings and current stock price.

Maybe it's a little more fair to look at since Amazon is going through some growth. We have an average analyst estimate of $0.67 for 2007 and $0.93 for 2008. At those future earnings and today's share price, you are looking at forward PE ratios of 84 and 61, respectively. That higher than Google, Yahoo, eBay, virtually everyone who's anyone!

Bottom Line: It's not worth it! Don't buy AMZN!

Forget about it! The company has a projected 5 year growth rate of around 22% per annum. Hello? Google is on track for a 5 year rate of 30% AND their current PE is lower!