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Amazon (AMZN) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Amazon (AMZN) closed the most recent trading day at $1,887.46, moving -0.24% from the previous trading session. This change lagged the S&P 500's 0.03% gain on the day. Meanwhile, the Dow lost 0.03%, and the Nasdaq, a tech-heavy index, added 0.14%.

Heading into today, shares of the online retailer had gained 5.74% over the past month, outpacing the Retail-Wholesale sector's gain of 2.91% and the S&P 500's gain of 3.23% in that time.

Investors will be hoping for strength from AMZN as it approaches its next earnings release, which is expected to be January 30, 2020. The company is expected to report EPS of $3.98, down 34.11% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $86 billion, up 18.81% from the year-ago period.

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. 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.

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. The Zacks Consensus EPS estimate has moved 1.19% lower within the past month. AMZN currently has a Zacks Rank of #3 (Hold).

Digging into valuation, AMZN currently has a Forward P/E ratio of 72.25. For comparison, its industry has an average Forward P/E of 27.25, which means AMZN is trading at a premium to the group.

Also, we should mention that AMZN has a PEG ratio of 2.63. 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. AMZN's industry had an average PEG ratio of 1.32 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 192, putting it in the bottom 25% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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