Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)

Email this Article

Send with mail | ahoo instead.
Required Needs to be a valid email
Required Needs to be a valid email
AMZN Earnings: The Crucial Number Not to Forget
http://mney.co/1J7xjIo
Required Please enter the correct value.
Twitter

AMZN Earnings: The Crucial Number Not to Forget

By Tara Clarke, Associate Editor, Money Morning • @TaraKateClarke • January 29, 2015

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

AMZN earningsImpressive sales but inconsistent profits have been the story of AMZN earnings the last few years.

Today's (Thursday) Q4 report is no different...

Amazon.com Inc.'s (Nasdaq: AMZN) sales increased 15% compared to last quarter, but profit dropped again from the same period a year ago - just not as much as expected.

The largest online retailer in the United States made a net profit of $214 million in the final three months of 2014. That's still a $25 million decline from the same quarter a year ago.

However, it was better than analysts projected. Fourth-quarter earnings per share (EPS) of $0.45 beat Thompson Reuters consensus estimates of $0.17. Revenue rose to $29.33 billion, falling under estimates of $29.65 billion.

The market reacted positively to the EPS beat. Amazon stock is up more than 11% after-hours.

So why has the world's biggest retailer failed to deliver consistent profits to investors?

Here's the key to Amazon's lack of solid net income - and what this means for playing AMZN stock right now...

AMZN Earnings: What You Need to Know

Money Morning Defense & Tech Specialist Michael A. Robinson - who has followed tech markets for more than 30 years - might be the biggest Amazon.com fan in the world.

"I love this company and couldn't get by without it," Robinson said today. "If I get any more deliveries from Amazon, I'm going to have to build an in-law unit for the UPS driver."

PROFIT ALERT: 33 million units of wearable tech devices shipped in 2014. That number is expected to rise to 50 million this year. A select group of companies will rake in the dough. Here are the wearable tech companies to keep your eyes on...

But Robinson advises investors take a look at one figure to truly understand what's going on with Amazon earnings (and to make an informed decision on how to play Amazon stock).

That's expenses.

You see, Amazon entered a build-out phase in 2011 and it has not ended. Just look at how much Amazon is spending:

  • On Jan. 28, Amazon said "Workmail" - a corporate email/calendar solution - will launch in Q2 2015.
  • On Jan. 19, Amazon Studios announced it will produce up to 12 original movies a year.
  • On Dec. 1 (Cyber Monday), the company deployed 15,000 drones - a project it had worked on since the summer - to help process orders in its fulfillment centers.
  • On Dec. 2, it launched a restaurant takeout and delivery service. A drone delivery service called "Amazon Prime Air" is currently in the company's R&D pipeline.
  • On Nov. 26, Amazon "completed its first level of talks" to buy Indian online fashion retailer Jabong.
  • On Aug. 20, Amazon announced a new headquarters in China to gain Asian market share.
  • On Aug. 18, it spent $970 million on Twitch Interactive Inc. - the world's largest gaming arena and the fourth-largest source of all U.S. web traffic.
  • On Aug. 13, the company entered the mobile payment business with its Local Register device.
  • And in July, it launched the Fire Phone.

AMZN earnings operating costOperating costs have outpaced revenue since 2011. That's precisely why the company hasn't been making massive amounts of money, despite customers' love for Amazon.com and its products:

Today, Amazon reported operating expenses rose to $28.7 billion from $25.1 billion the previous quarter.

Because of the amount of cash it pumps into expansion, Robinson views AMZN as a growth stock. In other words, even though it's been one of tech and retail's biggest names for a decade, it's more like a biotech stock than a retailer.

And that means investors waiting for AMZN profits have to be patient.

"This is the kind of thing growth investors have to deal with on a regular basis. The next leg up for a company means at least a few quarters of losses on a per-share basis because it's expensive to ramp up," Robinson said in July 2014. "I don't think they know how long their build out is going to take, and so they intentionally leave earnings reports and calls vague to give some wiggle room."

"The build out phase is eating into potential profits and at this point I'm anxious to see more money fall to the bottom line," he said.

Of course, investors hate uncertainty. That's why AMZN stock has fallen 20% in the last 12 months.

Bottom Line: After AMZN earnings today, Robinson calls Amazon stock a "Hold".

"I could be convinced to move this to a "Buy" if I saw a very concrete plan to get improved EPS," he said today. "This is, after all, not exactly a startup. The company has been in business for years and ought to be thinking of the shareholders by now. After all, they own the company."

 

Cash in on Tech Stocks in 2015: All the ingredients are now present for a multiyear run in tech stocks that will dwarf anything we've seen before - creating a slew of new tech millionaires. Make the right moves and you can be one of them. Tech expert Michael Robinson will show you exactly what to do with his just-released 2015 Tech Investor's Forecast...7 specific tech stocks to buy right now that could create Alibaba-like wealth this year. Download it here for free...

Join the conversation. Click here to jump to comments…

Login
guest
guest
0 Comments
Inline Feedbacks
View all comments
LIVE
Visit Money Morning Live


Latest News

January 19, 2023 • By Money Morning Stock Research Team

These Stocks Could Go To $0

January 9, 2023 • By Money Morning Stock Research Team

The Government Is Pouring $391 Billion Into These Stocks - Buy Now

December 27, 2022 • By Money Morning Staff Reports

6 IPOs in 2023 You Can’t Afford to Miss
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Penny Nation Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Vega Burst Trader Flashpoint Trader Darknet Hyper Momentum Trader

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell My Info

wpDiscuz