Amazon is a tough stock for a value investor like me to own – it has always been overvalued.  Yet it has been a great stock for years – up over 10 times over 10 years.  It currently is a $270 stock, with a negative 12 months earnings.  Compare that to Google – $800 stock with $32 in annual earnings, or even a Costco – a $100 stock with $4 in trailing 12 month earnings.

I decided to run some comparisons of Amazon with Costco – somewhat similar retail presence, leaders in their field, and likely to thrive in the new internet-centric economy. First, take a look at this earnings yield comparison:

It doesnt alarm me that their earnings yield has gone negative – Amazon has always been running on tight margins, investing in growth.  They are pumping lots of money into new distribution centers in many states to allow for quicker and cheaper shipping to more destinations.   However the 18 month trend of shrinking yield – caused largely by the stock price runup, has me a little worried – and when compared to a solid company like Costco, they have a lot of ground to make up.

The other chart that bothers me a little more is the revenue growth chart:

Revenue growth has been shrinking – perhaps the new distribution centers will help, but you have to wonder if the glory days of Amazon’s growth is behind it.  The market certainly doesn’t think so – during this time Amazon has quadrupled:

As much as I like Amazon the company and its future prospects, at this point I think I can find better long term value in the stock market.  Its tough to bet against this stock – its always proven doubters wrong, but maybe this time its time to get out.