Ask Matt: Is Amazon overvalued?

Q: Is Amazon overvalued?

A: Amazon is the stock to beat. The online retailer is even eating Walmart's lunch. Investors, though, need to know they're paying a rich price for a company that seems unstoppable.

Shares of Amazon are up 82% this year through Thursday's close, making it one of the best performers in the Standard & Poor's 500. And that's before investors saw how well the company did during the third quarter. The stock jumped roughly 10% in after-hours trading from Thursday's closing price of $563.91.

It's not just speculators piling in — the company's fundamentals have been markedly better than expected for two straight quarters. Amazon reported an adjusted profit of 17 cents a share during the third quarter, beating expectations calling for a loss of 13 cents a share. The second quarter was a similar story. Amazon earned 19 cents a share on an adjusted basis, rather than losing 14 cents a share as expected.

Don't think you're the only one to notice, though. Amazon shares trade for 366 times expected 2015 adjusted profit, says S&P Capital IQ, making the stock richly priced even if it grows at 63% a year as expected.

New Constructs, which examines expected future cash flow, rates Amazon "dangerous."

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.