Amazon - Momentum Stock Buy

Amazon.com, Inc. (AMZN) just reported another solid quarter but was somewhat cautious on guidance. Analysts are still bullish, projecting 29% earnings growth in the next-year period.

Company Description

Amazon.com operates as an online retailer both domestically and internationally. The company was founded in 1994 and has a market cap of $36 billion.

Amazon has produced consistent earnings over the last year in a volatile environment as consumer preferences shift towards convenience. The dynamic was evident when the company reported strong first-quarter results on April 24 that were ahead of expectations.

First-Quarter Results

Revenue was up 18% from last year to $4.89 billion. Income came in at $177 million, up 24% from last year, producing earnings of 41 cents per share, handily beating the consensus of 31 cents.

Margins

Amazon’s margins, long a concern of analysts and investors, looked solid, with its operating margin coming in at 6.6%, the highest reading in a few years.

CEO Speak

CEO Jeff Bezos made an interesting comment about the company’s operations, saying that “Everywhere we look, we find that we are doing every operation that we do, we do in sub optimal ways.” Bezos’ take suggests that the company is searching for ways to continue expanding margins.

Guidance and Estimates

Amazon was cautious about its guidance, saying its operating income could decline between 12% and 49% from last year.

The analyst community is more bullish, projecting current-year earnings of $1.52 per share and next-year earnings of $1.98, a 29% earnings growth projection.

The Chart

Shares of AMZN have been on a very smooth rally over the last 6 months, more than doubling in price while climbing from less than $35 to a recent high above $86. Take a look below.

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