Back to top

Analyst Blog

Playing Amazon (AMZN - Analyst Report) shares based on quarterly earnings reports is like playing with fire; if you did that for the company's Q2 earnings report after the bell Thursday, you likely got your fingers burned. The eCommerce giant posted a loss of 2 cents per share on revenues of $15.70 billion, as compared to Zacks Consensus Estimates of a profit of 4 cents per share and sales of $15.79 billion. Slight miss on the top end but a pretty deep swoon in earnings, and into negative territory for the third time in the past five quarters.

But CEO Jeff Bezos doesn't care about 3-month earnings performances, and most investors don't either. Amazon has expanded so far and wide from its earlier days as a simple on-line book retailer it's scarcely recognizable anymore; Bezo's game plan has always been about growth, plain and simple. The idea, then, is to buy Amazon shares and hold them -- sometimes for dear life -- for the long term. Those who've done so have been richly rewarded, with AMZN share value having gone up roughly ten million percent since the company's IPO in 1997. OK, a bit of an exaggeration there.

Analysts covering Amazon earnings haven't even bothered making a single estimate revision for the company's Q2, Q3, fiscal 2013 or 2014. Not one. Notably, the high estimate was for 18 cents per share and the low was for -16 cents. And then everybody sat back and waited for whatever was going to happen to happen.

Guidance for revenues between $15.45B - $17.15B is also a bit of a downer; the Zacks Consensus is for $17.02B, so it's still in the range... but not by all that much. Still, net sales were up 22% from a year ago, and $15.7 billion pretty much ensures the company will be sticking around awhile.

Amazon is now joining forces with Viacom and Comcast's (CMCSA - Analyst Report) NBCUniversal to work out major video licensing deals, and its Kindle products and App stores are still doing a healthy business. So while other CEOs -- heck, just about every single one of them -- might shy away from continuing to build out their company's infrastructure so massively, Bezos looks for now to be sticking with his gameplan. And caring whether after-market traders sell off their AMZN shares (they have, but only a little) is not part of that gameplan.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIMS PR… PPC 31.52 +3.72%
WILLIAMS(C)… CWEI 138.97 +3.55%
FLAMEL TECH… FLML 14.02 +3.16%
CALLON PETE… CPE 11.50 +3.14%