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Amazon Beats on Q3 Earnings, Guides Weak: ETFs to Watch
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After the closing bell on Thursday, the online e-commerce behemoth Amazon (AMZN - Free Report) reported mixed Q3 results, beating the estimates for earnings and lagging on revenues. In fact, Amazon posted another quarterly profit fueled by the growth of online shopping and its cloud-computing service.
Earnings per share came in at $5.75, easily beating the Zacks Consensus Estimate of $3.29 and improving from the year-ago earnings of 52 cents. Revenues climbed 30% year over year to $56.58 billion but fell short of the estimate of $57.11 billion. In particular, revenues from the cloud computing business — Amazon Web Services — surged 46% year over year to $6.7 billion.
For the fourth quarter of 2018, the company expects revenues to grow 10-20% to $66.5-$72.5 billion. The Zacks Consensus Estimate is pegged at $73.87 billion, which represents 22.19% growth. Amazon currently has a Zacks Rank #3 (Hold) and Growth Score of A.
Market Impact
The soft guidance for the holiday quarter has pushed shares of AMZN lower by as much as 9.5% in aftermarket hours on elevated volume. The beaten down price might be a solid entry point for investors given the company’s improving profitability and strong margins in the Amazon Web Services business. Additionally, the company has a track of giving conservative guidance (read: ETFs to Tap Amazon's Growth and Expansion Story).
Given this, ETFs with the highest allocation to this Internet giant are in focus for the coming days and investors should definitely cash in on the same trend.
This has newly debuted in the space and is the first ETF focused exclusively on retailers that principally sell online. It follows the ProShares Online Retail Index, holding 21 stocks in its basket. Amazon is the top firm accounting for about 24.2% of the portfolio. The product has amassed $22.6 million in its asset base, while currently trades in a paltry volume of around 17,000 shares a day on average. It charges 58 bps in annual fees from investors (read: Guide to E-commerce ETFs).
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Transition Index and holds 326 stocks in its basket. Of these, Amazon occupies the top position with 23.2% allocation. Internet & direct marketing retail takes the largest share at 27.8%, while restaurants and home improvement retail make up for more than 10% share each. VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 85,000 shares a day. The product has managed about $2.9 billion in its asset base and carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product 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 $14 billion and average daily volume of around 5.8 million shares. Holding 65 securities in its basket, Amazon takes the top spot with 21.8% of assets. Internet & direct marketing retail dominates about 28% of the portfolio, while specialty retail, and hotels restaurants and leisure round off the next two spots with a double-digit allocation each. The fund charges 0.13% in expense ratio and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Best ETF Strategies for Q4 & Tech Reshuffle).
This ETF provides targeted exposure to domestic consumer services’ stocks by tracking the Dow Jones U.S. Consumer Services Index. It holds 169 stocks in its basket, with Amazon being the top firm holding 20% share. In terms of industrial exposure, retailing makes up the largest share with 44.4%, followed by media & entertainment (22.5%), and consumer services (16.2%). The fund has amassed $924.2 million in its asset base, while trades in lower volumes of 32,000 shares a day on average. It charges 43 bps in annual fees from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, AMZN takes the top position in the basket with 20.3% share. The product has amassed $117.4 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 17,000 shares per day. RTH has a Zacks ETF Rank #2 with a Medium risk outlook.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding 338 stocks in its basket. Of these, AMZN takes the top spot with 19.6% share. Internet & direct marketing retail makes up for the top sector with 23.1% share followed by specialty retail (17.7%), hotels, restaurants & leisure (15.2%), and entertainment (11.9%). The product has amassed $694.5 million in its asset base, while trades in a good volume of around 143,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
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Amazon Beats on Q3 Earnings, Guides Weak: ETFs to Watch
After the closing bell on Thursday, the online e-commerce behemoth Amazon (AMZN - Free Report) reported mixed Q3 results, beating the estimates for earnings and lagging on revenues. In fact, Amazon posted another quarterly profit fueled by the growth of online shopping and its cloud-computing service.
Earnings per share came in at $5.75, easily beating the Zacks Consensus Estimate of $3.29 and improving from the year-ago earnings of 52 cents. Revenues climbed 30% year over year to $56.58 billion but fell short of the estimate of $57.11 billion. In particular, revenues from the cloud computing business — Amazon Web Services — surged 46% year over year to $6.7 billion.
For the fourth quarter of 2018, the company expects revenues to grow 10-20% to $66.5-$72.5 billion. The Zacks Consensus Estimate is pegged at $73.87 billion, which represents 22.19% growth. Amazon currently has a Zacks Rank #3 (Hold) and Growth Score of A.
Market Impact
The soft guidance for the holiday quarter has pushed shares of AMZN lower by as much as 9.5% in aftermarket hours on elevated volume. The beaten down price might be a solid entry point for investors given the company’s improving profitability and strong margins in the Amazon Web Services business. Additionally, the company has a track of giving conservative guidance (read: ETFs to Tap Amazon's Growth and Expansion Story).
Given this, ETFs with the highest allocation to this Internet giant are in focus for the coming days and investors should definitely cash in on the same trend.
ProShares Online Retail ETF (ONLN - Free Report)
This has newly debuted in the space and is the first ETF focused exclusively on retailers that principally sell online. It follows the ProShares Online Retail Index, holding 21 stocks in its basket. Amazon is the top firm accounting for about 24.2% of the portfolio. The product has amassed $22.6 million in its asset base, while currently trades in a paltry volume of around 17,000 shares a day on average. It charges 58 bps in annual fees from investors (read: Guide to E-commerce ETFs).
Vanguard Consumer Discretionary ETF (VCR - Free Report)
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Transition Index and holds 326 stocks in its basket. Of these, Amazon occupies the top position with 23.2% allocation. Internet & direct marketing retail takes the largest share at 27.8%, while restaurants and home improvement retail make up for more than 10% share each. VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 85,000 shares a day. The product has managed about $2.9 billion in its asset base and carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product 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 $14 billion and average daily volume of around 5.8 million shares. Holding 65 securities in its basket, Amazon takes the top spot with 21.8% of assets. Internet & direct marketing retail dominates about 28% of the portfolio, while specialty retail, and hotels restaurants and leisure round off the next two spots with a double-digit allocation each. The fund charges 0.13% in expense ratio and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Best ETF Strategies for Q4 & Tech Reshuffle).
iShares U.S. Consumer Services ETF (IYC - Free Report)
This ETF provides targeted exposure to domestic consumer services’ stocks by tracking the Dow Jones U.S. Consumer Services Index. It holds 169 stocks in its basket, with Amazon being the top firm holding 20% share. In terms of industrial exposure, retailing makes up the largest share with 44.4%, followed by media & entertainment (22.5%), and consumer services (16.2%). The fund has amassed $924.2 million in its asset base, while trades in lower volumes of 32,000 shares a day on average. It charges 43 bps in annual fees from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, AMZN takes the top position in the basket with 20.3% share. The product has amassed $117.4 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 17,000 shares per day. RTH has a Zacks ETF Rank #2 with a Medium risk outlook.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding 338 stocks in its basket. Of these, AMZN takes the top spot with 19.6% share. Internet & direct marketing retail makes up for the top sector with 23.1% share followed by specialty retail (17.7%), hotels, restaurants & leisure (15.2%), and entertainment (11.9%). The product has amassed $694.5 million in its asset base, while trades in a good volume of around 143,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>