{"id":7140,"date":"2017-08-26T01:40:21","date_gmt":"2017-08-26T01:40:21","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=7140"},"modified":"2017-08-26T01:40:21","modified_gmt":"2017-08-26T01:40:21","slug":"whats-with-amazon-and-an-sp-500-earnings-update","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=7140","title":{"rendered":"What’s with Amazon and an SP 500 Earnings Update"},"content":{"rendered":"

“Damn it – don’t ever trust your instincts” – John Cusack as Martin Blank in the all-time-great “Grosse Pointe Blank”<\/p>\n

Here is a Marketwatch article<\/a> written by Mark Hulbert on Amazon. I dont know Mark, but while the article might be accurate on the direction of Amazon’s stock – at least for the near-term – the logic is flawed.<\/p>\n

Here is a chart of Amazon:<\/p>\n

\"\"<\/a>
Click to enlarge \/ enhance<\/figcaption><\/figure>\n

 <\/p>\n

Not trying to pick on Mark, but Amazon has been flagged by a lot of analysts, Jim Cramer, technician’s, etc. as looking vulnerable, and all have been right and will likely be right, for a little while longer.<\/p>\n

Here is a spreadsheet thrown together tonight on Amazon showing trends in EPS and revenue estimates:<\/p>\n

FC – AMZNblogpost82517<\/a><\/p>\n

Amazon opened the year trading at roughly $750 and then peaked at $1,083 on July 27th, even as EPS estimates were falling and revenue estimates were somewhat “mixed”.<\/p>\n

Actually the stock peaked right around the time positive sentiment went off the charts on Amazon, and after the Whole Foods acquisition.<\/p>\n

However, here’s the thing: the only metric that has ever really mattered with Amazon is revenue growth, and forward revenue estimate revisions have turned higher once again (See the spreadsheet.)<\/p>\n

Amazon earnings estimates have been volatile for years based on Amazon’s investment cycles.<\/p>\n

Amazon is fine, and with “grocery” being a substantial chunk of the $5.5 – $6 bl in US retail sales, and 53% of WalMart revenue, the Whole Foods deal is going to up-end the US grocery business.<\/p>\n

Amazon has good support in the $900 area. Remember, from late 2015 through the first week of February, 2016 Amazon corrected 32%, from $700 down to $470.<\/p>\n

This correction is mild for Amazon.<\/p>\n

———————————————–<\/p>\n

SP 500 earnings (by the numbers):\u00a0<\/strong><\/em><\/p>\n

Forward 4-quarter estimate:<\/strong><\/em> $138.40<\/p>\n

P.E ratio:<\/strong><\/em> 17.6(x)<\/p>\n

PEG ratio:<\/strong><\/em> 1.77(x)<\/p>\n

SP 500 earnings yield: <\/strong><\/em>5.67%<\/p>\n

Year-over-year growth of forward estimate:<\/strong><\/em> +9.95% (almost 10%)<\/p>\n

Analysis \/ conclusion:<\/strong><\/em> The year-over-year growth of the forward estimate is almost 10% – should start a betting pool to see the week the estimate gets over 10%.<\/p>\n

Thanks for reading.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

“Damn it – don’t ever trust your instincts” – John Cusack as Martin Blank in the all-time-great “Grosse Pointe Blank”…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[152,91],"tags":[],"class_list":["post-7140","post","type-post","status-publish","format-standard","hentry","category-amazon","category-weekly-earnings-update"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7140"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7140\/revisions"}],"predecessor-version":[{"id":7146,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/7140\/revisions\/7146"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}