Key U.S. senators, Chuck Grassley and Dick Durbin, have intensified their examination of H-1B visa practices by sending inquiry letters to major tech firms, including Amazon (AMZN). Amid domestic workforce reductions, the senators seek detailed data on the number of H-1B workers, their salaries, and any resultant impact on American jobs. This reflects a broader Washington push to reassess the H-1B visa program, especially after the introduction of a significant visa fee during the Trump administration. Companies are expected to respond by October 10 with pertinent details.
Amazon.com Inc, a leader in the online retail space, operates as a marketplace for third-party sellers. Retail-related revenue accounts for approximately 75% of its total revenue, followed by Amazon Web Services (AWS) cloud computing services at 15%, advertising services between 5% to 10%, and other offerings making up the remainder. Internationally, Amazon’s non-AWS sales are led by Germany, the United Kingdom, and Japan, constituting 25% to 30% of its sales.
With a market capitalization of $2.35 trillion, Amazon is a dominant player in the Consumer Cyclical sector, specifically within the Retail – Cyclical industry. The company’s stock is traded on the NASDAQ exchange.
Financial Health Analysis
Amazon’s financial performance is characterized by strong revenue growth and expanding margins:
- Revenue: $670.04 billion, with a 3-year growth rate of 9.3%.
- Operating Margin: 11.37%, indicating efficient cost management.
- Net Margin: 10.54%, reflecting strong profitability.
- EBITDA Margin: 21.45%, showcasing robust earnings before interest, taxes, depreciation, and amortization.
Amazon’s balance sheet is solid, with a current ratio of 1.02 and a debt-to-equity ratio of 0.4, indicating a healthy liquidity position and manageable debt levels. The Altman Z-Score of 5.87 suggests strong financial stability, while the Beneish M-Score of -2.67 indicates a low likelihood of earnings manipulation.
Valuation & Market Sentiment
Amazon’s valuation metrics provide insight into its market positioning:
- P/E Ratio: 33.57, compared to historical ranges.
- P/S Ratio: 3.54, reflecting revenue-based valuation.
- P/B Ratio: 7.03, indicating book value considerations.
Analyst sentiment remains positive, with a target price of $263.99 and a recommendation score of 1.7. Technical indicators such as the RSI of 39.13 suggest the stock is approaching oversold territory, while moving averages indicate potential support levels.
Institutional ownership stands at 64.17%, with insider ownership at 8.35%. However, recent insider activity shows 17 insider selling transactions over the past three months, totaling a value of $5.68 billion.
Risk Assessment
Amazon’s financial health is supported by strong grades in growth, profitability, and balance sheet strength. However, sector-specific risks, such as regulatory scrutiny and market volatility, remain pertinent. The company’s beta of 1.17 indicates moderate volatility relative to the market.
Investors should consider these factors alongside upcoming catalysts, such as regulatory developments and potential changes in the H-1B visa program, which could impact Amazon’s operational dynamics.
Disclaimer: The story “Amazon (AMZN) Faces Senate Scrutiny Over H-1B Visa Usage” first appeared on GuruFocus.com and is syndicated via Digpu & NewsTex.