Amazon.com, Inc. (AMZN): One of the Greatest Long-Term Investors of Our Time

Amazon.com CFO Tom Szkutak:

From a margin standpoint, always challenging to predict where that will come out in terms of absolute numbers, but what we will do is we want to make sure that we try to maximize free cash flow. That’s something that we’ve always said… So again, our goal is to — we don’t focus on individual margins. Our goal is to make sure that we generate free cash flow, large amounts of free cash flow, and use that capital efficiently. And so those are goals that we have. And we certainly think that opportunity is there in each of the businesses that we operate in.

The simple definition of free cash flow is CFFO less capital expenditures (capex). So free cash flow is very dependent on how much management spends in capex, and management has certainly boosted capex over the last five years. In 2008, capex was about 20% of CFFO. Over the last 12 months, it was 94%. Translation: Amazon is investing big time for the future. And just so we’re clear, it’s not like Amazon is financially strapped, either, with almost $7.5 billion in cash and equivalents on the balance sheet.

Investing in the bottom line
We all make our own investment decisions, and some make more sense than others. And I understand why some can’t get comfortable with owning Amazon.com, Inc. (NASDAQ:AMZN) stock. But I do believe it’s wise to look further than just the anemic earnings per share the company puts up every quarter. Bezos is clearly building something much, much bigger than a quarterly number for Wall Street to chew on. That’s why I own shares; I truly believe Jeff Bezos is one of the greatest long-term investors of our time.

The article One of the Greatest Long-Term Investors of Our Time originally appeared on Fool.com and is written by Jason Moser.

Jason Moser owns shares of Amazon.com. The Motley Fool recommends Amazon.com and McDonald’s. The Motley Fool owns shares of Amazon.com and McDonald’s.

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