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Amazon (AMZN) to Open New Fulfillment Center in Kernersville

Zacks Equity Research

Amazon.com Inc. AMZN announced plans to open a new fulfillment center in Kernersville next year, in order to meet the growing demand in the online shopping space.

The company has been spending heavily on new fulfillment centers over the past few years. Fulfillment centers are giant warehouses that help online retailers store and ship products, as well as handle returns quickly. These are important for providing the level of service that customers have started expecting from Amazon.

Inside the Headlines

According to Amazon, the new facility will span one million square foot. The facility is expected to create about 1,000 jobs. The employees will pick, pack and ship orders at the facility. In addition, there will be opportunities in finance, operations, management, IT, human resources, and safety and security.

Last July, Amazon had signed a lease with Seefried for up to 40 years for this fulfillment center. For now, the facility is under development but is expected to be operational by next year.

The company pays competitive wages, and provides healthcare along with other full-time benefits. In addition, it offers programs like Career Choice to help employees pursue courses related to fields that are in demand. The online giant also provides other benefits like generous maternity and parental leaves.

Our Take

Amazon has been strengthening its presence all over the world.

In our view, Amazon must maintain its U.S. market share while expanding globally, in order to retain the leading position of the company. To this end, it needs to invest more in fulfillment, as well as technology and content, especially in international markets with less penetration and higher growth rates.

Although increased expenses may hurt Amazon’s bottom line in the near term, we believe that this is necessary to maintain its dominance in this highly competitive market.

Amazon.com, Inc. Price and Consensus

 

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Zacks Rank & Stocks to Consider

Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Facebook, Inc. FB, IAC/InterActiveCorp IAC and AXT, Inc. AXTI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.

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