Justifying which stock to invest in, given the options of Exxon Mobil and Amazon.

1. Dele Dina, Frank Graham, Hyun Sik Kim, Katrina Damschroder,
Layan Barghouthi, Hassan Haider

2. Agenda
● Short Term Investment Criteria
o Justification
o Outlook
● Long Term Investment Criteria
o Justification
o Outlook

3. Our Recommendations
Short-Term
● Amazon (AMZN)
● Buy for the year,
reevaluate at the end of
the period
● Must be willing to take
risk
Long-Term
● Exxon Mobil (XOM)
● Buy and hold, ride out
oil price volatility
● Long term prospects in
alternatives will also
improve company
standing forward

4. Amazon- Short Term
● Currently Trading (4/20) at $389.51
● Analyst Estimate of $400.00 (Analyst
Median)
● EPSxP/E Price: N/A*
● 2014 Revenue: 88.99B
● Profit Margin: -.27%
● ROE: -2.35%
● ROA: .24%

5. Amazon
● Amazon consistently records a loss.
o *This, in turn, prevents us from calculating P/E,
so it is difficult to come to an appropriate share
price without a proper valuation model.
● However, despite this lack of profitability,
Amazon’s stock has performed exceptionally
well.
● No dividend declared or paid

6. Amazon Point and Figure Chart

7. Amazon Candlestick Chart

8. Amazon

9. Amazon Analyst Estimates
EPS Trends Current Qtr.
Mar 15
Next Qtr.
Jun 15
Current Year
Dec 15
Next Year
Dec 16
Current Estimate -0.12 -0.16 0.41 2.30
7 Days Ago -0.12 -0.17 0.40 2.27
30 Days Ago -0.12 -0.17 0.43 2.27
60 Days Ago -0.12 -0.17 0.42 2.28
90 Days Ago 0.18 0.01 0.82 3.23

10. Amazon- Outlook
● Amazon has made consistent investments in
expanding and improving their business
model.
● As such, some of these benefits should be
realized in the next year
● Additionally, Amazon has an array of
services lined up for release in the near
future, which may help increase revenue and
NOI.

11. Amazon- Outlook
● Operating margin expansion should continue to benefit from the
shipping loss moderation
● Normalization of the international growth rate
● Amazon Web Services (AWS) may generate several billion dollars in
revenue and prove to be the fastest-growing piece of Amazon’s
business
● Recent approval of drone shipment technology
● In the investment period, summer shopping season, back to school,
and holiday season should be strong times for sales and growth
● Expansion of services across the Amazon platform

12. Exxon- Long Term
● Trading at $86.93
● P/E x EPS= $87.02
● Slightly undervalued, room for growth
● On a downward slide, opportune time to buy
in
● Median target at $92.00

13. Exxon
 Approximately 7% ROA
 Approximately 19% ROE
 Approximately 9% Profit Margin
 Strong capital management and effective
cost controls
 2014 Revenue: 369.43B

14. Exxon
● 95% of revenue is tied to oil operations
o Short term volatility is a risk, but long term
stability and price increase will bolster revenues
● Expanded investments in alternative energy
and drilling locations
● $.69 per share dividend- regular cash flow
through duration of investment

15. Exxon
● Oil prices are expected to hover in the $50 to
$70 range through the next two years
● Increase from recent volatility will help
generate revenue
● Historically strong performer with regular
dividend payments
● Expansion of non-oil operations

16. Exxon - Point & Figure

17. Exxon Candlestick Graph

18. Exxon

19. Exxon Mobil Analyst Estimates
EPS Trends Current Qtr.
Mar 15
Next Qtr.
Jun 15
Current Year
Dec 15
Next Year
Dec 16
Current Estimate 0.82 0.81 3.74 5.25
7 Days Ago 0.84 0.84 3.78 5.31
30 Days Ago 0.82 0.84 3.79 5.35
60 Days Ago 0.77 0.81 3.67 5.32
90 Days Ago 1.09 1.10 4.88 6.21

20. Exxon and Oil Prices
● Per barrel extraction cost: $12.72
(Bloomberg)
● Any price above this level allows Exxon to
cover their production cost

21. Exxon- Outlook
● Investments in the Arctic, the ultra-deep sea, & the oil sands of
Canada
● Anadarko Petroleum is considering selling its multi-billion dollar
stake in Mozambique's giant gas reserves, Exxon is leading
contender
● Lubricants for wind, nuclear, and geothermal energy sources that
enhance efficiency
● Consistently strong and effective in managing capital and
maintaining financial flexibility

22. Month AMZN
(87 shares)
XOM
(389
shares)
Relative
Strength
1 33,843 33,843 1.00
2 33,060 33,454 0.98
3 32,799 33,065 0.99
4 32,103 35,010 0.92
5 28,014 33,454 0.84
6 27,492 35,010 0.78
7 27,492 36,177 0.75
8 26,448 35,339 0.75
9 33,495 35,788 0.94
10 28,275 37,344 0.76
11 29,496 38,511 0.77

23. Questions