After blockbuster results from Google's parent Alphabet GOOGL , investors have high hopes for Amazon AMZN , which is set to release second-quarter 2018 results on Jul 26 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 (read: Alphabet Touches New Highs on Blockbuster Q2: ETFs to Tap ).
Amazon has been on a stellar run over the past three months, having risen nearly 25.3% and easily crushing the industry's growth of 17.1%. The outperformance is likely to continue as Amazon is poised to beat the Zacks Consensus Estimate for earnings and has attractive fundamentals. Inside Our Methodology
Amazon has a Zacks Rank #2 (Buy) and an Earnings ESP
of +12.85%, 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 in an investor's portfolio. Our research shows that the chance of a positive earnings surprise is as high as 70% for the stocks with this combination. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter
Though the stock has seen negative earnings estimate revision of a penny over the past 30 days for the second quarter, the Zacks Consensus Estimate represents a whopping year-over-year increase of 522.50%. Amazon's earnings surprise history is also impressive, with a positive earnings surprise of 1,303.34% on average for the last four quarters (see: all the Consumer Discretionary ETFs here
Additionally, the company is expected to report revenues of $53.45 billion, up 40.82% from the year-ago quarter. However, the stock has a dismal VGM Score of D and falls under the bottom-ranked Zacks industry ( bottom 30%
According to the analysts polled by Zacks, Amazon has an average target price of $1,864.34, 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
The online e-commerce behemoth topped $900 billion in its market capitalization on Jul 18 for the first time and is racing to reach a trillion dollar with Apple AAPL . This is primarily thanks to the blockbuster fourth annual Prime Day 2018 - the biggest shopping day in Amazon history, surpassing Black Friday and Cyber Monday. Amazon sold more than 100 million products during the 36-hour-long event, despite some glitches that prevented customers from placing orders in initial hours (read: Amazon Tops $900B on Record Prime Day Sales: ETFs to Tap ).
A record number of Prime members shopped for more than a million deals across 17 countries. Per industry estimates, Amazon Prime Day could fetch about $3.5 billion in sales globally. Small and medium-sized businesses globally have already exceeded more than $1 billion in sales per the company's press release. Notably, Amazon Prime remains a key revenue growth driver.
ETFs to Buy
Given this, ETFs having the highest allocation to this online behemoth will be in focus going into its earnings announcement. These funds are potential movers if Amazon surprises the market with an earnings beat. As a result, we have highlighted five funds that have AMZN as the top firm in their portfolio:
ProShares Online Retail ETF ONLN - This fund debuted in the space on Jul 13, and has accumulated $4 million in its asset base. Amazon makes up for 24.2% in the fund's basket.
Consumer Discretionary Select Sector SPDR Fund XLY - The fund has gained 10.3% in three months and carries a Zacks ETF Rank #2 (Buy), with a Medium risk outlook. Amazon accounts for 23.8% share.
Vanguard Consumer Discretionary ETF VCR - This ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook and has gained 9.6% in the same time frame. Amazon has 21.3% allocation.
iShares U.S. Consumer Services ETF IYC - It has added 9.2% and carries a Zacks ETF Rank #2 with a Medium risk outlook. Here, AMZN takes 20.7% share (read: 5 Sector ETFs Most Exposed to Trade Tensions ).
VanEck Vectors Retail ETF RTH - The fund has delivered returns of 11.2% over the past three months and has a Zacks ETF Rank #3 with a Medium risk outlook. Amazon makes up for a 20.8% of the assets.
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