Is Amazon's stock undervalued? One estimate says yes.

Amazon's stock has performed worse than the overall market this year, but it is still undervalued according to one estimate.

Close-up of sign with logo on facade of the regional headquarters of ecommerce company Amazon in the ... [+] Silicon Valley town of Sunnyvale, California, October 28, 2018. (Photo by Smith Collection/Gado/Getty Images)Getty Images
As the world increasingly moves online, Amazon is poised to become an even more dominant force in the realm of ecommerce. With its expansive product selection and convenient delivery options, the company is already a favorite among shoppers looking for an easy and efficient way to buy what they need. But Amazon is also making significant investments in other areas, such as artificial intelligence and cloud computing, that could make it an even more powerful player in the years to come.

Amazon’s stock has lost a significant amount of value this year, but it still remains overvalued according to one estimate. The company’s top line missed the consensus estimates in Q3 despite a 15% y-o-y increase to $127.1 billion. The revenues benefited from a 27% y-o-y rise in the amazon web services segment and a 20% growth in the North America unit, partially offset by a 5% drop in the international division. On the cost front, the cost of sales and technology & content expenses saw an unfavorable increase in the quarter. It resulted in a net income of $2.9 billion, down from $3.2 billion in the year-ago period.

It is clear that Amazon's growth has begun to slow down in the face of macroeconomic headwinds and increased competition. However, the company's strong performance in North America and its dominant position in the cloud computing market continue to drive its overall sales growth. While costs have increased in recent months, Amazon remains a profitable company with a strong balance sheet.

Looking ahead, the company expects fourth quarter revenues to remain in the range of $140 - $148 billion (up 2-8%). Overall, we estimate that Amazon's revenues will reach $498.9 billion in FY2022. Additionally, the company is likely to report a net loss of around $3.6 billion and revenue per share of $48.86. This, coupled with a P/S multiple of just above 3x, will lead to a valuation of $160.

Amazon's peers fare relatively well on most metrics, though the company still outperforms them on many fronts. You can find other useful comparisons for companies across industries at Peer Comparisons.

If you're looking for a more balanced portfolio, our high-quality portfolio and multi-strategy portfolio have both outperformed the market since 2016. With returns of 134% and 262%, respectively, there's no reason to settle for anything less.

AMZN Return compared with Trefis Multi-Strategy PortfolioTrefis
Amazon's return over the last year has been strong, outpacing the Trefis Multi-Strategy Portfolio.

Looking at the Trefis Price Estimates for various companies, it's clear that there is a lot of potential for growth in the near future. With accurate data and careful analysis, investors can make well-informed decisions about which stocks to buy and hold onto for the long term.