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Amazon (AMZN) Gains But Lags Market: What You Should Know

Zacks Equity Research

Amazon (AMZN) closed the most recent trading day at $1,751.60, moving +0.64% from the previous trading session. This change lagged the S&P 500's 0.91% gain on the day. Meanwhile, the Dow gained 1.22%, and the Nasdaq, a tech-heavy index, added 1%.

Coming into today, shares of the online retailer had lost 2.67% in the past month. In that same time, the Retail-Wholesale sector lost 0.08%, while the S&P 500 gained 1.65%.

AMZN will be looking to display strength as it nears its next earnings release. On that day, AMZN is projected to report earnings of $3.99 per share, which would represent a year-over-year decline of 33.94%. Our most recent consensus estimate is calling for quarterly revenue of $85.98 billion, up 18.78% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $20.52 per share and revenue of $279.11 billion, which would represent changes of +1.89% and +19.85%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AMZN. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. AMZN is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note AMZN's current valuation metrics, including its Forward P/E ratio of 84.84. This represents a premium compared to its industry's average Forward P/E of 21.

It is also worth noting that AMZN currently has a PEG ratio of 3.09. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Commerce stocks are, on average, holding a PEG ratio of 1.32 based on yesterday's closing prices.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 152, putting it in the bottom 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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