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Bear of the Day: Amazon (AMZN)

Brian Bolan

Amazon (AMZN) has estimates for 2014 and 2015 drop over the last several months. Today, AMZN is a Zacks Rank #5 (Strong Sell), and it is the Bear of the Day.

Earnings Are Tomorrow

Amazon reports earnings after the close on July 24.

While the two most recent reports were both a beat and a miss, the stock slipped 6% in the session following the release. Investors have historically not focused on earnings for Amazon.

Company Description

Amazon is known as the everything store, as they sell tens of thousands of items from its website. The company has sells digital services via Amazon Web Services.

Most Recent Quarter

AMZN reported a strong 1Q14 beating the Zacks Consensus Estimate by $0.01 in posting a 4.5% positive earnings surprise. The company reported revenues of $19.7B when the street was calling for $19.5B in the quarter. The $262M top line beat translated into a 1.5% revenue surprise.

Prior To That Beat

Prior to the most recent beat, AMZN saw a big miss of the Zacks Consensus Estimate. The company reported earnings of $0.51 when the Zacks Consensus Estimate was calling for $0.71. That translates to a negative earnings surprise of 28%.

AMZN Sees Estimates Moving Lower

The Zacks Consensus Estimate for 2014 for AMZN has been falling all year. Starting at $1.99 in January, the Zacks Consensus Estimate fell to $1.74 in February, then tumbled to $1.30 in April and is now at $1.19.

The 2015 Zacks Consensus Estimate has also been moving in the wrong direction. In December, $5.66 was where the Zacks Consensus Estimate stood but it has fallen to $2.94.

Recent Reports

There have been a few research notes out of late that suggest that AMZN will see significant margin pressure as they continue to lower prices for AWS.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.

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