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Amazon Likely to Beat on Q3 Earnings: Buy These ETFs
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Amazon (AMZN - Free Report) is set to release third-quarter 2018 results on Oct 25 after market close. Being a market leader in online e-commerce, it is worth taking a look at the company’s fundamentals ahead of its results.
Amazon has seen rough trading over the past three months, having shed 0.7% but easily outperforming the industry’s average decline of 19.8%. The outperformance is likely to continue as Amazon is poised to beat the Zacks Consensus Estimate for earnings and has attractive fundamentals (read: Sector ETFs & Stocks to Bet for Q3 Earnings).
Inside Our Methodology
Amazon has a Zacks Rank #2 (Buy) and an Earnings ESP of +6.56%, indicating high chances of beating estimates this quarter. Betting on stocks that have a combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) usually leads to profits. Our research shows that the chance of a positive earnings surprise is as high as 70% for stocks with this combination. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock has seen positive earnings estimate revision of 4 cents over the past 30 days for the third quarter and the Zacks Consensus Estimate indicates a year-over-year increase of 532.7%. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator for the stock (read: Q3 FAANG Earnings Likely to be Solid: 5 ETFs to Play).
Amazon’s earnings surprise history is also impressive, with a positive earnings surprise of 1,347.10% on average for the last four quarters. Additionally, the company is expected to report revenue growth of 30.2%. The stock has a top Growth Score of A and a solid Momentum Score of B. It falls under a top-ranked Zacks industry (top 32%).
According to analysts polled by Zacks, Amazon has an average target price of $2,186.50, with nearly 94% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
Amazon.com, Inc. Price, Consensus and EPS Surprise
The online e-commerce behemoth is now the second U.S. trillion-dollar company, trailing Apple (AAPL - Free Report) , which crossed the threshold on Aug 2. It topped $1 trillion in its market capitalization on Sep 4 for the first time (read: Amazon Hits Trillion Dollar Market Cap: ETFs to Buy).
During the third quarter, the e-commerce giant significantly expanded its grocery services, which include delivery as well as pick-up services for natural and organic products such as fresh produce, everyday food items and quality meat and seafood, purchased at Whole Foods via Prime Now across U.S cities. For the third quarter of 2018, the company expects revenues to grow 23-31% to $54-$57.5 billion. Notably, Amazon Prime remains a key revenue growth driver.
Per the latest survey by Piper Jaffray, Amazon dominates teens’ online shopping habits with nearly half share, up from 44% this spring and leads other competitors by a wide margin. The second “most preferred shopping website” is Nike.com at 5% (read: ETFs to Tap Amazon's Growth and Expansion Story).
ETFs to Buy
Given this, ETFs with the highest allocation to this online behemoth will be in focus ahead of its earnings announcement. These funds are likely to gain if Amazon surprises the market with an earnings beat. As a result, we have highlighted seven funds that have AMZN as the top firm in their portfolio:
ProShares Online Retail ETF (ONLN - Free Report) : This fund debuted in the space on Jul 13 and has accumulated $23.3 million in its asset base. Amazon makes up for 24.2% in the fund’s basket.
Vanguard Consumer Discretionary ETF (VCR - Free Report) : This ETF has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Amazon has 23.2% allocation.
VanEck Vectors Retail ETF (RTH - Free Report) : The fund has a Zacks ETF Rank #2 with a Medium risk outlook. Amazon makes up for 20.3% of the assets.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) : It has a Zacks ETF Rank #3 with a Medium risk outlook. Amazon makes up for 20% in the fund’s basket
Image: Bigstock
Amazon Likely to Beat on Q3 Earnings: Buy These ETFs
Amazon (AMZN - Free Report) is set to release third-quarter 2018 results on Oct 25 after market close. Being a market leader in online e-commerce, it is worth taking a look at the company’s fundamentals ahead of its results.
Amazon has seen rough trading over the past three months, having shed 0.7% but easily outperforming the industry’s average decline of 19.8%. The outperformance is likely to continue as Amazon is poised to beat the Zacks Consensus Estimate for earnings and has attractive fundamentals (read: Sector ETFs & Stocks to Bet for Q3 Earnings).
Inside Our Methodology
Amazon has a Zacks Rank #2 (Buy) and an Earnings ESP of +6.56%, indicating high chances of beating estimates this quarter. Betting on stocks that have a combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) usually leads to profits. Our research shows that the chance of a positive earnings surprise is as high as 70% for stocks with this combination. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock has seen positive earnings estimate revision of 4 cents over the past 30 days for the third quarter and the Zacks Consensus Estimate indicates a year-over-year increase of 532.7%. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator for the stock (read: Q3 FAANG Earnings Likely to be Solid: 5 ETFs to Play).
Amazon’s earnings surprise history is also impressive, with a positive earnings surprise of 1,347.10% on average for the last four quarters. Additionally, the company is expected to report revenue growth of 30.2%. The stock has a top Growth Score of A and a solid Momentum Score of B. It falls under a top-ranked Zacks industry (top 32%).
According to analysts polled by Zacks, Amazon has an average target price of $2,186.50, with nearly 94% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. Price, Consensus and EPS Surprise | Amazon.com, Inc. Quote
What to Watch?
The online e-commerce behemoth is now the second U.S. trillion-dollar company, trailing Apple (AAPL - Free Report) , which crossed the threshold on Aug 2. It topped $1 trillion in its market capitalization on Sep 4 for the first time (read: Amazon Hits Trillion Dollar Market Cap: ETFs to Buy).
During the third quarter, the e-commerce giant significantly expanded its grocery services, which include delivery as well as pick-up services for natural and organic products such as fresh produce, everyday food items and quality meat and seafood, purchased at Whole Foods via Prime Now across U.S cities. For the third quarter of 2018, the company expects revenues to grow 23-31% to $54-$57.5 billion. Notably, Amazon Prime remains a key revenue growth driver.
Per the latest survey by Piper Jaffray, Amazon dominates teens’ online shopping habits with nearly half share, up from 44% this spring and leads other competitors by a wide margin. The second “most preferred shopping website” is Nike.com at 5% (read: ETFs to Tap Amazon's Growth and Expansion Story).
ETFs to Buy
Given this, ETFs with the highest allocation to this online behemoth will be in focus ahead of its earnings announcement. These funds are likely to gain if Amazon surprises the market with an earnings beat. As a result, we have highlighted seven funds that have AMZN as the top firm in their portfolio:
ProShares Online Retail ETF (ONLN - Free Report) : This fund debuted in the space on Jul 13 and has accumulated $23.3 million in its asset base. Amazon makes up for 24.2% in the fund’s basket.
Vanguard Consumer Discretionary ETF (VCR - Free Report) : This ETF has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Amazon has 23.2% allocation.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) : The fund carries a Zacks ETF Rank #2 with a Medium risk outlook. Amazon accounts for 22.5% share (read: Best ETF Strategies for Q4 & Tech Reshuffle).
iShares U.S. Consumer Services ETF (IYC - Free Report) : It carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Here, AMZN takes 20.5% share (read: Consumer Confidence Soars to 18-Year High: 5 ETFs to Buy).
VanEck Vectors Retail ETF (RTH - Free Report) : The fund has a Zacks ETF Rank #2 with a Medium risk outlook. Amazon makes up for 20.3% of the assets.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) : It has a Zacks ETF Rank #3 with a Medium risk outlook. Amazon makes up for 20% in the fund’s basket
iShares Global Consumer Discretionary ETF (RXI - Free Report) : AMZN accounts for 19.6% share in the basket (see: all the Consumer Discretionary ETFs here).
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