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Amazon (AMZN - Free Report) is set to release fourth-quarter 2021 results on Feb 3, after market close. Being a market leader in e-commerce, it is worth taking a look at the company’s fundamentals ahead of its results (see: all the Consumer Discretionary ETFs here).
Amazon lost about 10% over the past three months but outperformed the industry’s average decline of 16.6%. This outperformance might continue given that the online behemoth has reasonable chances of an earnings beat.
Image Source: Zacks Investment Research
This has put investors’ focus on ETFs — ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) — with a substantial allocation to this online behemoth.
Inside Our Methodology
Amazon has a Zacks Rank #3 (Hold) and an Earnings ESP of +16.28%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock saw negative earnings estimate revision of a penny over the past 30 days for the fourth quarter. The Zacks Consensus Estimate represents a substantial year-over-year earnings decline of 72.4% for the to-be-reported quarter. However, Amazon’s earnings surprise history is impressive, with a beat of 38.95%, on average, in the last four quarters. Additionally, the company is expected to report revenue growth of 9.8%. The stock has a solid Momentum Score of B but falls under a bottom-ranked Zacks industry (bottom 11%).
The Zacks Consensus Estimate for the average target price is $4,158 with nearly 100% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What to Watch?
In its last quarter earning release, Amazon warned of several additional billions of dollars in costs in Q4 given labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs.
The e-commerce giant offered a downbeat revenue guidance of $130-$140 billion for the fourth quarter, suggesting 4-12% year-over-year growth.
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels, and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 40 stocks in its basket. Amazon is the top firm accounting for 26.1% of the portfolio.
ProShares Online Retail ETF has amassed $601.1 million in its asset base and currently trades in a moderate volume of around 98,000 shares a day on average. It charges 58 bps in annual fees from investors.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 329 stocks in its basket. Of these, Amazon takes the top spot with 21.1% share. Internet & direct marketing retail makes up for the top sector, with 23.9% share followed by specialty retail (20.5%) and automobiles (16.7%).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.5 billion in its asset base while trading in a good volume of around 259,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Will ETFs Suffer as US Consumer Confidence Weakens in January).
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. Of these, Amazon occupies the top position, with 21.1% allocation. Internet & direct marketing retail takes the largest share at 24.1% while automobile manufacturers, home improvement retail, and restaurants round off the next two spots.
VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 163,000 shares a day. The product has managed about $6 billion in its asset base and carries a Zacks ETF Rank #2 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of nearly $20 billion and an average daily volume of around 9.5 million shares. Holding 61 securities in its basket, Amazon takes the top spot with 22% of assets. Internet & direct marketing retail dominates about 23.5% of the portfolio, while automobiles, hotels restaurants, and leisure, and specialty retail round off the next two spots with a double-digit allocation each.
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with an 18.8% share.
VanEck Vectors Retail ETF has amassed $221.2 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 17,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
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ETFs in Focus as Amazon Gears Up for Q4 Earnings
Amazon (AMZN - Free Report) is set to release fourth-quarter 2021 results on Feb 3, after market close. Being a market leader in e-commerce, it is worth taking a look at the company’s fundamentals ahead of its results (see: all the Consumer Discretionary ETFs here).
Amazon lost about 10% over the past three months but outperformed the industry’s average decline of 16.6%. This outperformance might continue given that the online behemoth has reasonable chances of an earnings beat.
This has put investors’ focus on ETFs — ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) — with a substantial allocation to this online behemoth.
Inside Our Methodology
Amazon has a Zacks Rank #3 (Hold) and an Earnings ESP of +16.28%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock saw negative earnings estimate revision of a penny over the past 30 days for the fourth quarter. The Zacks Consensus Estimate represents a substantial year-over-year earnings decline of 72.4% for the to-be-reported quarter. However, Amazon’s earnings surprise history is impressive, with a beat of 38.95%, on average, in the last four quarters. Additionally, the company is expected to report revenue growth of 9.8%. The stock has a solid Momentum Score of B but falls under a bottom-ranked Zacks industry (bottom 11%).
The Zacks Consensus Estimate for the average target price is $4,158 with nearly 100% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What to Watch?
In its last quarter earning release, Amazon warned of several additional billions of dollars in costs in Q4 given labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs.
The e-commerce giant offered a downbeat revenue guidance of $130-$140 billion for the fourth quarter, suggesting 4-12% year-over-year growth.
ETFs in Focus
ProShares Online Retail ETF (ONLN - Free Report)
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels, and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 40 stocks in its basket. Amazon is the top firm accounting for 26.1% of the portfolio.
ProShares Online Retail ETF has amassed $601.1 million in its asset base and currently trades in a moderate volume of around 98,000 shares a day on average. It charges 58 bps in annual fees from investors.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 329 stocks in its basket. Of these, Amazon takes the top spot with 21.1% share. Internet & direct marketing retail makes up for the top sector, with 23.9% share followed by specialty retail (20.5%) and automobiles (16.7%).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.5 billion in its asset base while trading in a good volume of around 259,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Will ETFs Suffer as US Consumer Confidence Weakens in January).
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. Of these, Amazon occupies the top position, with 21.1% allocation. Internet & direct marketing retail takes the largest share at 24.1% while automobile manufacturers, home improvement retail, and restaurants round off the next two spots.
VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 163,000 shares a day. The product has managed about $6 billion in its asset base and carries a Zacks ETF Rank #2 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of nearly $20 billion and an average daily volume of around 9.5 million shares. Holding 61 securities in its basket, Amazon takes the top spot with 22% of assets. Internet & direct marketing retail dominates about 23.5% of the portfolio, while automobiles, hotels restaurants, and leisure, and specialty retail round off the next two spots with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund charges 0.10% in expense ratio and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 ETFs to Tap the Four-Decade Strongest U.S. Economy).
VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with an 18.8% share.
VanEck Vectors Retail ETF has amassed $221.2 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 17,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.