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Amazon (AMZN) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, Amazon (AMZN) closed at $3,184.94, marking a -1% move from the previous day. This change lagged the S&P 500's 0.22% loss on the day. Meanwhile, the Dow lost 0.35%, and the Nasdaq, a tech-heavy index, lost 0.28%.

Prior to today's trading, shares of the online retailer had gained 2.81% over the past month. This has lagged the Retail-Wholesale sector's gain of 8.23% and the S&P 500's gain of 3.82% in that time.

AMZN will be looking to display strength as it nears its next earnings release, which is expected to be October 29, 2020. The company is expected to report EPS of $7.27, up 71.87% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $92.83 billion, up 32.66% from the prior-year quarter.

AMZN's full-year Zacks Consensus Estimates are calling for earnings of $31.65 per share and revenue of $370.19 billion. These results would represent year-over-year changes of +37.55% and +31.96%, respectively.

Investors should also note any recent changes to analyst estimates for AMZN. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.43% lower within the past month. AMZN is currently a Zacks Rank #3 (Hold).

Looking at its valuation, AMZN is holding a Forward P/E ratio of 101.66. For comparison, its industry has an average Forward P/E of 45.97, which means AMZN is trading at a premium to the group.

It is also worth noting that AMZN currently has a PEG ratio of 3.37. 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. The Internet - Commerce industry currently had an average PEG ratio of 3.37 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 107, putting it in the top 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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