Amazon.com, Inc.

 

AMZN Details
 
Decent Net Sales Guidance for Q4FY19: Amazon.com, Inc. (NASDAQ: AMZN) provides physical, e-commerce, and omnichannel retail and other services to businesses through commercial agreements, strategic alliances, and business relationships. The company’s offerings include web services, technology, fulfillment, computing, digital storage, and other services, as well as enable sellers to offer products or services through the stores. 
 
Q3FY19 Highlights for the period ended 30 September 2019:AMZN reported its FY19 third-quarter results, wherein the company reported net sales of $69,981 million as compared to $56,576 million in the previous corresponding period. The company reported net income at $2,134 million as compared to $2,883 million in Q3FY18. During the quarter, the company introduced more than 20 new Fire TV products, namely Fire TV Edition soundbar, Fire TV Cube, OLED Fire TV Edition smart TV, the Fire TV Edition smart TV with far-field Alexa voice control, etc. AMZN expanded its content line-up for Fire TV customers, which includes YouTube TV app, Apple TV app, free News app. During the third quarter, Fire TV announced more than 37 million active users worldwide and continues to hold its leading position across streaming media player segment across the U.S., the U.K., Germany, Japan, and India. The company informed that it has collaborated with General Motors (NYSE: GM) to integrate Alexa into millions of vehicles across GM’s four brands, namely Chevrolet, Buick, GMC, and Cadillac. During the quarter, AmazonFresh expanded to new markets like Indianapolis, Houston, Minneapolis, and Phoenix.
 
Segment-Wise Performance:Net sales from the North America segment came in at $42,638 million, up ~24% on pcp. North America contributed to ~61% of the total revenue.During the quarter, the international and amazon web services (AWS) segments reported an income of $18,348 million and $8,995 million, depicting a growth of 18% and 35%, respectively on pcp terms. International and AWS represented ~26% and ~13% of the total revenue, respectively.

Q3FY19 Financial Highlights (Source: Company Reports)
 
Guidance:As per the Q4FY19 guidance, AMZN expects net sales between $80.0 billion to $86.5 billion, representing growth in the range of 11% and 20% on y-o-y basis. This guidance takes into account an unfavorable impact of approximately 80 basis points from foreign exchange rates. Operating income is expected to be between $1.2 billion - $2.9 billion as compared to $3.8 billion in Q4FY18.

 Stock Recommendation:The stock of AMZN is quoting at $1752.79, with a market capitalization of ~$869.03 billion. The stock has generated returns of -5.64% and 15.90% in the last six-months and one-year, respectively. During Q3FY19, the business has delivered operating margin and net margin of 4.5% and 3.1%, higher than the industry median of 1.9% and 0.4%, respectively. ROE of the business stands at 3.9%, higher than the industry median of 1.5%. The business expects lower double-digit growth in Q4FY19 revenues. The company states that Alexa has the capability of operating more than 85,000 smart home products from over 9,500 unique brands. AMZN has upgraded its product Alexa with several smart home features and products, which help customers find hassle-free smart home products that are simple to set up and use. Considering the performance in the third quarter, decent net sales guidance for the upcoming quarter, higher profitability ratios in comparison to the industry, price movement and current trading levels, we recommend a ‘Hold’ rating on the stock at the current market price of $1752.79, up 0.01% as on 19 November 2019.
 

 
 AMZN Daily Technical Chart (Source: Thomson Reuters)

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