Investors in the United States seem to place less emphasis on cash flow while focusing more on other valuations methodologies such as multiples. As evidence, companies such as Amazon and Expedia trade at 2-3x revenues, but choose to reinvest gross profits into new initiatives, thereby lowering its operating income quite substantially. In turn this brings companies, such as the ones on our list today, to a high Operating Income valuation multiple of above 30 times.
Amazon.com Inc. (NASDAQ: AMZN) – $534.38
Department Stores
Amazon.com, Inc. (Amazon.com) is an e-commerce company that sells a range of products and services through its websites. The Company’s products are offered through consumer-facing websites, which include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It designs its websites to enable products to be sold by the Company and by third parties across various product categories. It also manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, Echo and Fire phones.
- Market Cap: $245,973,480,748
- EV/Revenue: 2.51x
- EV/Operating Income: 313.61x
- Research and Development Expense (2014): $9,275,000,000
VMware Inc. (NYSE: VMW) – $85.77
IT Services & Consulting
VMware, Inc. is a provider of virtualization infrastructure solutions. The Company develops and markets its product and service offerings within three product groups, which include software-defined data center (SDDC), hybrid cloud computing, and end-user computing (EUC). The Company’s SDDC is designed to transform the data center into an on-demand service that addresses application requirements by abstracting, pooling and automating the services that are required from the underlying hardware.
- Market Cap: $36,526,083,880
- EV/Revenue: 4.97x
- EV/Operating Income: 29.62x
- Research and Development Expense (2014): $1,239,000,000
Autodesk Inc. (NASDAQ: ADSK) – $54.82
Software
Autodesk, Inc. (Autodesk) is a design software and services company, offering customers productive business solutions through technology products and services. The Company serves customers in the architecture, engineering and construction; manufacturing, and digital media, consumer and entertainment industries. The Company operates in four segments: Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E).
- Market Cap: $12,479,895,413
- EV/Revenue: 4.44x
- EV/Operating Income: 113.06x
- Research and Development Expense (2014): $725,200,000
Citrix Systems Inc. (NASDAQ: CTXS) – $76.42
Software
Citrix Systems, Inc. provides virtualization, mobility management, networking, and SaaS solutions to businesses. The Company’s solutions offer secure, mobile workspaces that provide people with access to apps, desktops, data and communications on any device, over any network or cloud. It markets and licenses its products directly to customers. The Company operates through two segments: Enterprise and Service Provider division and the Mobility Apps division.
- Market Cap: $12,280,796,250
- EV/Revenue: 4.01x
- EV/Operating Income: 31.43x
- Research and Development Expense (2014): $553,817,000
GoPro Inc. (NASDAQ: GPRO) – $60.62
Household Electronics
GoPro, Inc. produces mountable and wearable cameras and accessories, which the Company refers to as capture devices. Additionally, it develops and provides desktop editing software and mobile applications for free to consumers. The Company offers HERO line of capture devices, which include HERO2, HERO3 camera, the HERO3+ camera and the HERO4 and HERO. GoPro also provides a selection of mounts designed to enable consumers to capture content while engaged in a range of activities. This includes equipment-based mounts, such as the helmet, handlebar, roll bar, as well as grip and tripod mounts.
- Market Cap: $7,561,121,331
- EV/Revenue: 4.15x
- EV/Operating Income: 27.56x
- Research and Development Expense (2014): $151,852,000
