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Amazon-Heavy ETFs Rise on Second-Quarter Earnings

This article was originally published on ETFTrends.com.

Most ETFs with heavy Amazon exposure are experiencing an uptick today as the online retail company reported its second-quarter earnings on Thursday, trouncing expectations with an earnings per share figure of $5.07 as opposed to the consensus estimates of $2.50 EPS.

As of 11:30 a.m. ET, Consumer Discret Sel Sect SPDR ETF (XLY) was up 0.41%, Vanguard Consumer Discretionary ETF (VCR) was up 0.14%,  iShares US Consumer Services ETF (IYC) was up 0.28% and VanEck Vectors Retail ETF (RTH) was up 0.39%. ProShares Online Retail ETF (ONLN) has the heaviest weighting of Amazon at 24.83%, but it was in the red 0.93%.

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Amazon missed on revenue, posting $52.9 billion versus analyst expectations of $53.41 billion. Nonetheless, it didn't affect negatively impact its stock price as it was up as much as 3.6% on Friday following the earnings report.

Amazon attributes its growth to its high-margin business operations, such as its cloud and advertising. Amazon CFO Brian Olsavsky also cited more efficiency in Amazon's warehouses and data centers, and growth of its higher-margin third party marketplace.

Amazon's cloud service contributed to its operating income of $1.6 billion and advertising sales came in at $2.2 billion. Amazon's total revenue, including sales from Whole Foods, increased 39% from the previous year.

Amazon's North America revenue rose by 44% to $32.1 billion and its international sales grew 27% to $14.6 billion. Looking ahead, Amazon expects revenue in the range of $54 billion to $57.5 billion in the third-quarter--just below street estimates of $55.6 billion to $62.2 billion.

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"Amazon reported 2Q profitability well above consensus forecasts, with operating income margin expanding 400bps yoy driven by AWS, advertising, and fulfillment efficiencies," analyst Heath Terry said in a note to clients Thursday. "Guidance for 3Q operating income was also meaningfully above consensus forecasts. … We continue to believe that we are in the sweet spot between Amazon investment cycles where new fulfillment/data centers are driving accelerating growth while incremental capacity utilization and efficiency is driving margin expansion."

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