Walmart (WMT - Free Report) saw its stock price surge over 10% Thursday after the retail giant reported stronger-than-anticipated quarterly financial results. Yet, while some investors dive into WMT stock, the e-commerce powerhouse that forced Walmart to revamp its business model seems as strong as ever. So let’s see why Amazon (AMZN - Free Report) stock looks like a great buy right now.
Quick WMT Overview
Walmart’s quarterly revenues popped by 3.8% to reach $128 billion, which topped the Zacks Consensus Estimate. Walmart also beat our estimate on the bottom end of the income statement, with its adjusted Q2 earnings up over 19%. Meanwhile, Walmart’s U.S. comparable store sales surged 4.5% and its e-commerce sales soared by 40%.
But Jeff Bezos’ firm isn’t worried about what Walmart, Target (TGT - Free Report) , Kroger KR, and other retailers have done to adapt since Amazon looks poised to jump into even more new industries in its seemingly endless quest to expand.
Amazon has spoken with some of Europe’s biggest insurance firms to see if they would be willing to list products on an Amazon UK price comparison website, according to a recent Reuters report. It is unclear if any of the insurance companies want to work with the e-commerce firm, but nonetheless, it’s another new business Amazon has its sights set on. And investors should know by now that Amazon seems to do whatever it wants.
Amazon is also in the running to buy Landmark Theaters, based on a new Bloomberg story. The company is reportedly trying to get into the movie theater business in order to complement and find somewhat guaranteed distribution for its array of indie-style movies that feature A-list Hollywood stars—many of which are set to hit theaters this fall. Landmark is a small movie theater chain compared to the likes of AMC (AMC - Free Report) and Cinemark (CNK - Free Report) , with just around 50 theaters. But the company boasts a ton of major locations in big cities such as New York, Chicago, Los Angeles, and San Francisco.
Furthermore, analysts at D.A. Davidson suggested last week that Amazon could easily enter the gas station business and the vacation discount industry, similar to Costco COST. “We see an opportunity for it to exploit the remaining two – gas (stations) and travel… The company has a history of solving complex logistical problems,” analyst Tom Forte wrote in a note to clients. “Financially, it seeks opportunities that can generate significant free cash flow."
Beyond some of these more speculative moves, Amazon purchased online pharmacy company PillPack in June, in a move that will likely shake up the industry. Investors should note that CVS CVS and Walgreens Boots Alliance WBA began to invest in online sales and delivery before this move in anticipation of AMZN’s increased push into the medical and pharmaceutical world.
Let’s also not forget that Amazon offers a slew of TV shows, on top of its movies, that help Amazon Prime compete directly against Netflix (NFLX - Free Report) , Hulu, and soon enough Disney (DIS - Free Report) and Apple (AAPL - Free Report) . The company has pushed into live sports with the rights to stream NFL games and the Premier League in the UK. Plus, the company grabbed 34% of the total cloud computing market during the second quarter, according to Synergy Research Group—topping Microsoft’s (MSFT - Free Report) 14%, IBM’s (IBM - Free Report) 8%, Google’s (GOOGL - Free Report) 6%, and Alibaba’s (BABA - Free Report) 4%.
Looking ahead, AMZN’s third-quarter revenues are projected to climb by just over 30% to hit $56.91 billion, based on our current Zacks Consensus Estimate. Meanwhile, its full-year revenues are expected to reach $234.82 billion, which would represent a roughly 32% surge.
Amazon’s adjusted Q3 earnings are projected to skyrocket from $0.52 per share in the year-ago quarter to $3.21 per share. The firm’s fiscal 2018 earnings are expected to soar over 279%.
Plus, Amazon has earned 18 earnings estimate revisions with 100% agreement to the upside over the last 30 days, for both its current year and fiscal 2019. AMZN’s positive, long-term earnings revision momentum helps it earn a Zacks Rank #1 (Strong Buy). Amazon also rocks “A” grades for both Growth and Momentum in our Style Scores system.
Amazon’s growth story will end eventually. But investors must always ask themselves if they see AMZN’s expansion coming to a halt anytime in the next few years?
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