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

Zacks Equity Research

In the latest trading session, Amazon (AMZN) closed at $1,891.30, marking a +0.43% move from the previous day. This change lagged the S&P 500's 0.7% gain on the day. Meanwhile, the Dow gained 0.29%, and the Nasdaq, a tech-heavy index, added 1.04%.

Coming into today, shares of the online retailer had gained 6.98% in the past month. In that same time, the Retail-Wholesale sector gained 4.86%, while the S&P 500 gained 4.38%.

Wall Street will be looking for positivity from AMZN as it approaches its next earnings report date. The company is expected to report EPS of $3.98, down 34.11% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $86.01 billion, up 18.82% from the prior-year quarter.

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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.03% lower. AMZN is currently a Zacks Rank #3 (Hold).

Looking at its valuation, AMZN is holding a Forward P/E ratio of 71.79. For comparison, its industry has an average Forward P/E of 26.45, which means AMZN is trading at a premium to the group.

Meanwhile, AMZN's PEG ratio is currently 2.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Commerce was holding an average PEG ratio of 1.37 at yesterday's closing price.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 156, which puts it in the bottom 39% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AMZN in the coming trading sessions, be sure to utilize Zacks.com.


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