Amazon.com: AWS - Not The Rivers Of Gold Imagined

NASDAQ with the Amazon.com summary shows that the share price closed at $ 949.04 with a market cap of 453.6 billion and the P / E ratio of 178.39.

The market capitalization of 453.6 billion is 110 times the first quarter of 2011 by Amazon.com Q1-2017, a twelve-month EBIT (TTM) of 4.12 billion.

AWS contributed 77.5% of EBIT Q1-2017 TTM 4.12 billion, which helped keep ongoing earnings growth for AWS vital to Amazon.com.

Investors who buy at $ 949.04 on Monday, intending to hold for five years pending an average return of 10.0% per annum, will sell five to 1,528.44 $ per share. If the expected return on investment is a doubling of the share price, an exit price within five years will be required $ 1,898.08, representing a return of 14.87% per year.

At an expected return of 20% per year, the sale price is $ 2 361.52 per share. However, if the price / EBIT (P / EBIT) ratio should remain at current 110 and provide the outstanding shares remain at 478m, EBIT in five years would only increase by 4.12 billion US dollars. To 6610 million for 10% yield, 8.24 billion for the yield of 14.87% and 10.25 billion for the return on investment of 20% per year. The net profit estimated after interest and taxes for the year 2021, in these scenarios would be between 4 billion and $ 7 billion. Now this level of compensation seems very feasible for this genius online, with a total turnover of 136 billion in 2016. However, there are many "ifs" mentioned above, which means that many uncertainty and increase in Uncertainty equals greater risk. Therefore, investors should definitely look back Amazon.com in the range of at least 10% to 20% and maybe higher.

For performance expectations below 10%, I am sure there are much safer investment options. Stock price gains were averaging over 33% per year between the end of 2011 and the end of 2016, the stock price increasing from $ 179.03 to $ 753.67. From the end of 2016 to May 8, 2017, a further increase of 26% brought the stock price to $ 949.04. I have to ask if there is a quantification of future growth in EBIT would justify stock price increases and the size of the role expected of AWS to contribute to EBIT growth?