Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Amazon.com, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 12.3% to 10.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 31, DPO 108, DIO 41). At a 8.3% WACC with mid-year discounting, the terminal value (87% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $457.23 per share, suggesting AMZN is undervalued by 116.0% at the current price of $211.71.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 183,364 | 204,872 | 229,803 | 255,257 | 282,277 | 289,334 |
| (−) Net Interest | 3,371 | 3,767 | 4,225 | 4,693 | 5,190 | 5,319 |
| (+) D&A | 78,449 | 87,477 | 98,478 | 114,551 | 127,517 | 130,705 |
| EBITDA | 265,184 | 296,116 | 332,507 | 374,500 | 414,984 | 425,358 |
| (−) Tax | 29,691 | 33,174 | 37,211 | 41,333 | 45,708 | — |
| (−) CapEx | 106,195 | 118,651 | 133,090 | 147,831 | 163,480 | — |
| (−) ΔWC | 5,008 | -1,272 | -1,475 | -1,506 | -1,598 | — |
| Free Cash Flow (FCF) | 124,290 | 145,563 | 163,681 | 186,842 | 207,394 | — |
| Peers' EBITDA Multiple | 15.2x | |||||
| Terminal Value | 6,469,698 | |||||
| WACC / Discount Rate | 8.28% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 119,446 | 129,198 | 134,175 | 141,455 | 145,013 | 4,347,403 |
| Enterprise Value | 5,016,690 | |||||
| Projection Period | 669,287 | 13.3% | ||||
| Terminal Value | 4,347,403 | 86.7% | ||||
| (−) Current Net Debt | 66,177 | |||||
| Equity Value | 4,950,513 | |||||
| (÷) Outstanding Shares | 10827M | |||||
| Fair Price | $457 | +116.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.2x | 13.2x | 15.2x | 17.2x | 19.2x |
|---|---|---|---|---|---|
| 6.3% | $384 | $442 | $500 | $557 | $615 |
| 7.3% | $367 | $422 | $478 | $533 | $588 |
| 8.3% | $352 | $404 | $457 | $510 | $563 |
| 9.3% | $337 | $387 | $438 | $488 | $539 |
| 10.3% | $323 | $371 | $419 | $467 | $516 |
Current price: $211.71. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.