Why Amazon Is Poised to Underperform

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online retail giant Amazon.com has received a distressing two-star ranking.

With that in mind, let's take a closer look at Amazon and see what CAPS investors are saying about the stock right now.

Amazon facts

Headquarters (founded)

Seattle (1994)

Market Cap

$118.4 billion

Industry

Internet retail

Trailing-12-Month Revenue

$61.1 billion

Management

Founder/Chairman/CEO Jeff Bezos

CFO Thomas Szkutak

Return on Equity (average, past 3 years)

9%

Cash/Debt

$11.5 billion / $4.4 billion

Competitors

Apple

eBay

Wal-Mart


Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 21% of the 6,812 members who have rated Amazon believe the stock will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star reddingrunner, succinctly summed up the Amazon bear case for our community:

I've always avoided shorting crappy stocks on CAPS as a cheap way of scoring points (not realistic in the real world). But I think Amazon is one of the greatest companies in the world. I've often wished I could buy it. But it really is ridiculously overvalued. Maybe it will soar in the next year. But in five years it will have a P/E below 30, probably well below.

Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that's due for a correction. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

The article Why Amazon Is Poised to Underperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and eBay. The Motley Fool owns shares of Amazon.com, Apple, and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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