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Shares of Amazon (AMZN - Free Report) have climbed nearly 14% over the last four weeks as the e-commerce powerhouse continues to inspire investor confidence. With that said, let’s dive into why Amazon currently looks like a strong buy stock. Hint: it is poised to keep growing in all the right places.
Recent Growth News
Amazon posted adjusted Q1 earnings that crushed our Zacks Consensus Estimate a couple of weeks ago. The company’s first quarter revenues also surged 43% to reach $51.04 billion. This growth really can’t be overstated, especially considering that Amazon has no plans to slow down its expansion anytime soon.
Amazon Prime, its widely popular subscription service, is set to become even more valuable. CEO Jeff Bezos publicly revealed for the first time in April that Prime now boasts 100 million paying members worldwide. In the first quarter, Amazon’s subscription revenues, made up mostly of Prime, audiobook and digital music fees, as well as all other non-AWS subscriptions services, surged 60% hit $3.10 billion.
Amazon also recently announced a rate hike for its Prime membership fees, which are set to jump from $99 a year to $119, starting on May 11. On top of these Prime-based revenue gains, Amazon’s Music streaming service, known as Amazon Music Unlimited, is quickly becoming a huge player—with some estimates placing the company behind only Spotify (SPOT - Free Report) and Apple (AAPL - Free Report) Music. Like many other of its ventures, Amazon has not officially released specific numbers, but it did note in a recent letter to shareholders that Music Unlimited “now has tens of millions of paid customers” and saw total memberships double over the past six months.
The e-commerce company’s Prime Service also includes free access to all of the company’s video offerings. Amazon has poured money into original series, including a new big-budget Lord of the Rings show, as it begins to compete more directly with Netflix (NFLX - Free Report) . Investors should also note that Amazon Prime has been able to grow without that much awareness that members also gain access to Prime Video.
A recently published Morgan Stanley (MS - Free Report) survey showed that only one out of three Prime members actually uses Amazon's streaming video service. More importantly for investors, one in five subscribers still don’t know they even have access to video in general. On its face, this might sound like a bad thing, but once more people understand the amount of streaming video content that is available on top of the free shipping, Prime could grow even more rapidly.
And let’s not forget, Amazon’s core e-commerce business surged 20% to $26.94 billion in the first quarter, while its third-party seller revenues soared 44% to hit $9.27 billion. AWS also saw its revenues climb 49% to $5.44 billion.
Lastly, for those that don’t think the world will go totally online, Amazon’s physical stores sales surged from $1.28 billion in the third quarter of 2017 to $4.26 billion in Q1. Much of this growth can be attributed to Amazon’s Whole Foods purchase, but the company has also slowly added more bookstore locations and expanded its pop-up shop business.
Looking Ahead
Amazon is still near the heart of its growth stage as a company, as its sky-high valuation metrics currently prove. And investors should be willing to forgo a more reasonable valuation in favor of the kind of growth Amazon looks ready to offer.
Amazon noted in its Q1 earnings release that it expects to report revenues between $51 billion and $54 billion in the second quarter. This falls in line with our current Q2 estimate of $53.37 billion—which would mark a 40% year-over-year surge—and is up nearly $1 billion from our $52.43 billion estimate prior to the release of Amazon’s first quarter results. For the full fiscal year, Amazon’s revenues are projected to climb by 33.6% to $237.64 billion.
Furthermore, the company that became well-known on Wall Street for casting earnings aside is projected to see its Q2 adjusted EPS figure skyrocket over 500% to $2.42 per share. Looking ahead to the full-year, Amazon’s earnings are expected to expand by 166% to reach $12.10 per share.
Bottom Line
Amazon is currently a Zacks Rank #1 (Strong Buy) and is expected to see its EPS figure expand at an annualized rate of 30.2% over the next three to five years. The company has also earned 16 full-year earnings estimate revisions, with 100% agreement to the upside, all within the last 30 days.
Clearly, Amazon’s growth days are from over, especially as it expands its reach in booming industries from cloud computing and machine learning to streaming video and music. Meanwhile, Amazon.in was the fastest growing marketplace in India in 2017, which could prove to be a key growth region as one of the world’s largest countries expands its middle class.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Why Amazon (AMZN) Is a Strong Buy Stock Right Now
Shares of Amazon (AMZN - Free Report) have climbed nearly 14% over the last four weeks as the e-commerce powerhouse continues to inspire investor confidence. With that said, let’s dive into why Amazon currently looks like a strong buy stock. Hint: it is poised to keep growing in all the right places.
Recent Growth News
Amazon posted adjusted Q1 earnings that crushed our Zacks Consensus Estimate a couple of weeks ago. The company’s first quarter revenues also surged 43% to reach $51.04 billion. This growth really can’t be overstated, especially considering that Amazon has no plans to slow down its expansion anytime soon.
Amazon Prime, its widely popular subscription service, is set to become even more valuable. CEO Jeff Bezos publicly revealed for the first time in April that Prime now boasts 100 million paying members worldwide. In the first quarter, Amazon’s subscription revenues, made up mostly of Prime, audiobook and digital music fees, as well as all other non-AWS subscriptions services, surged 60% hit $3.10 billion.
Amazon also recently announced a rate hike for its Prime membership fees, which are set to jump from $99 a year to $119, starting on May 11. On top of these Prime-based revenue gains, Amazon’s Music streaming service, known as Amazon Music Unlimited, is quickly becoming a huge player—with some estimates placing the company behind only Spotify (SPOT - Free Report) and Apple (AAPL - Free Report) Music. Like many other of its ventures, Amazon has not officially released specific numbers, but it did note in a recent letter to shareholders that Music Unlimited “now has tens of millions of paid customers” and saw total memberships double over the past six months.
The e-commerce company’s Prime Service also includes free access to all of the company’s video offerings. Amazon has poured money into original series, including a new big-budget Lord of the Rings show, as it begins to compete more directly with Netflix (NFLX - Free Report) . Investors should also note that Amazon Prime has been able to grow without that much awareness that members also gain access to Prime Video.
A recently published Morgan Stanley (MS - Free Report) survey showed that only one out of three Prime members actually uses Amazon's streaming video service. More importantly for investors, one in five subscribers still don’t know they even have access to video in general. On its face, this might sound like a bad thing, but once more people understand the amount of streaming video content that is available on top of the free shipping, Prime could grow even more rapidly.
And let’s not forget, Amazon’s core e-commerce business surged 20% to $26.94 billion in the first quarter, while its third-party seller revenues soared 44% to hit $9.27 billion. AWS also saw its revenues climb 49% to $5.44 billion.
Lastly, for those that don’t think the world will go totally online, Amazon’s physical stores sales surged from $1.28 billion in the third quarter of 2017 to $4.26 billion in Q1. Much of this growth can be attributed to Amazon’s Whole Foods purchase, but the company has also slowly added more bookstore locations and expanded its pop-up shop business.
Looking Ahead
Amazon is still near the heart of its growth stage as a company, as its sky-high valuation metrics currently prove. And investors should be willing to forgo a more reasonable valuation in favor of the kind of growth Amazon looks ready to offer.
Amazon noted in its Q1 earnings release that it expects to report revenues between $51 billion and $54 billion in the second quarter. This falls in line with our current Q2 estimate of $53.37 billion—which would mark a 40% year-over-year surge—and is up nearly $1 billion from our $52.43 billion estimate prior to the release of Amazon’s first quarter results. For the full fiscal year, Amazon’s revenues are projected to climb by 33.6% to $237.64 billion.
Furthermore, the company that became well-known on Wall Street for casting earnings aside is projected to see its Q2 adjusted EPS figure skyrocket over 500% to $2.42 per share. Looking ahead to the full-year, Amazon’s earnings are expected to expand by 166% to reach $12.10 per share.
Bottom Line
Amazon is currently a Zacks Rank #1 (Strong Buy) and is expected to see its EPS figure expand at an annualized rate of 30.2% over the next three to five years. The company has also earned 16 full-year earnings estimate revisions, with 100% agreement to the upside, all within the last 30 days.
Clearly, Amazon’s growth days are from over, especially as it expands its reach in booming industries from cloud computing and machine learning to streaming video and music. Meanwhile, Amazon.in was the fastest growing marketplace in India in 2017, which could prove to be a key growth region as one of the world’s largest countries expands its middle class.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>