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Should You Buy Amazon ETFs Ahead of Q4 Earnings?

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·4 min read
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Amazon AMZN is set to release fourth-quarter 2019 results on Jan 30, after market close. Being a market leader in e-commerce, it is worth taking a look at the company’s fundamentals ahead of its results (see: all the Consumer Discretionary ETFs here).

Amazon has gained 5.1% over the past three months, underperforming the industry’s average growth of 6.3%. This might reverse given that the online behemoth has chances of an earnings beat.



Inside Our Methodology

Amazon has a Zacks Rank #3 (Hold) and an Earnings ESP of +10.23%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The stock saw no earnings estimate revision over the past 30 days for the fourth quarter. Amazon’s earnings surprise history is impressive, with a positive earnings surprise of 7.69%, on average, for the last four quarters. Additionally, the company is expected to report revenue growth of 18.8%. The stock has a top Growth Score of A but falls under a bottom-ranked Zacks industry (bottom 29%). However, the Zacks Consensus Estimate represents a substantial year-over-year decline of 34.1%.

The Zacks Consensus Estimate for average target price is $2,205.33 with nearly 94% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.

Amazon.com, Inc. Price, Consensus and EPS Surprise

Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. Price, Consensus and EPS Surprise

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

What’s Hot

Amazon smashed records in the last holiday season with "billions of items" purchased in the period from Thanksgiving to Christmas. More than 5 million new customers started Prime free trials or paid memberships globally and the number of items that were delivered with one-day or same-day shipping quadrupled from the last holiday season. Third-party sellers saw double-digit growth from the year-ago level, selling more than 1 billion items (read: ETFs to Tap on Amazon's Record Holiday Sales).

ETFs to Buy

Given this, ETFs with the highest allocation to this online behemoth will be in focus ahead of its earnings announcement. These funds are likely to gain if Amazon delivers an earnings beat. We have highlighted eight ETFs that have AMZN as the top firm in their portfolio:

ProShares Online Retail ETF ONLN: Amazon makes up for 24% in the fund’s basket.   

Fidelity MSCI Consumer Discretionary Index ETF FDIS: It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Amazon makes up for 23.8% in the fund’s basket (read: Will Consumer Discretionary ETFs Suffer the Coronavirus Blow?).

Consumer Discretionary Select Sector SPDR Fund XLY: The fund carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Amazon accounts for 23.6% share.

Vanguard Consumer Discretionary ETF VCR: This ETF has a Zacks ETF Rank #2 with a Medium risk outlook. Amazon has 22.8% allocation (read: 5 ETFs From Top Industries That Won't Let You Down in 2020).

VanEck Vectors Retail ETF RTH: The fund has a Zacks ETF Rank #3 with a Medium risk outlook. Amazon makes up for 20.7% of the assets.

iShares Evolved U.S. Discretionary Spending ETF IEDI: Amazon makes up for 10.8% in the fund’s basket.

iShares U.S. Consumer Services ETF IYC: It carries a Zacks ETF Rank #3 with a Medium risk outlook. Here, AMZN takes 10.3% share.

iShares Global Consumer Discretionary ETF RXI: AMZN accounts for 10.4% share in the basket.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
iShares U.S. Consumer Services ETF (IYC): ETF Research Reports
 
iShares Global Consumer Discretionary ETF (RXI): ETF Research Reports
 
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
 
VanEck Vectors Retail ETF (RTH): ETF Research Reports
 
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
 
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
 
iShares Evolved U.S. Discretionary Spending ETF (IEDI): ETF Research Reports
 
ProShares Online Retail ETF (ONLN): ETF Research Reports
 
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