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Bull of the Day

Amazon (AMZN - Free Report) is just about to report earnings. It was a little more than a year ago that I played some calls for a huge gain following the first prime day, this year I bought even more stuff. Let's take a look at the fundamentals of this stock and explore why it is a Zacks Rank #1 (Strong Buy) and the Bull of the Day.

Why I Like It

This is a large-cap stock is a market leader.

A good earnings history when compared to the Zacks Consensus Estimate.

From March to October there were consistent monthly increases in the Zacks Consensus Estimate for 2016 and 2017.

Revenue diversification from AWS bolsters the retailing business and the company looks to attack other verticals as well.

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The Recent Numbers

I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. AMZN reported the June 2016 quarter back in late July, so we are only weeks away from the company reporting the September quarter.

The most recent quarter was a beat on bottom. The company posted EPS of $1.78 when the Zacks Consensus Estimate was calling for $1.14. That translates into a positive earnings surprise of 56%.

Revenue came in $670M ahead of expectations for a 2.25% positive revenue surprise. As a result, the stock was bid up by more than 3% in the session following the report.

Description

Amazon.com sells consumer products and Web Services worldwide. The company was founded in 1994 and is headquartered in Seattle, Washington.

Earnings History

The company has a strong history of beating the Zacks Consensus Estimate. There has only been one miss in the last six reports. The rest of the reports were all beats.

Estimates

The estimate picture looks really good, with the Zacks Consensus Estimate for 2016 moving from $4.50 in March to $5.86 in October.

The 2017 number moved from $8.07 in March to the current reading of $10.72.

Valuation

The value investors hate this stock. The growth oriented investors love this stock. The metrics always seem high for AMZN, as trailing twelve months PE was 203x compared to an industry average of 32x. The forward multiple of 140x is many multiples of the 26.5x industry average. Price to book comes in at 23x while the industry average comes it at 6x. Price to sales is almost in line, with a multiple of 3.2x for the AMZN vs the 2x industry average.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color-coded line represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.

AMAZON.COM INC Price and Consensus

AMAZON.COM INC Price and Consensus | AMAZON.COM INC Quote

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