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Amazon (AMZN - Free Report) is set to release third-quarter 2023 results on Oct 26, 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 lost 0.5% over the past three months and underperformed the industry, with an average decline of 7%. The underperformance might reverse if the online behemoth comes up with an earnings beat.
This has brought ETFs — ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) — with a substantial allocation to this online behemoth in focus.
Inside Our Methodology
Amazon has an Earnings ESP of -2.11% and a Zacks Rank #2 (Buy). According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) 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 in the past 30 days for the third quarter. The Zacks Consensus Estimate implies year-over-year earnings growth of 190% for the to-be-reported quarter. Additionally, Amazon’s earnings surprise history is impressive, with a surprise of 40.96%, on average, in the last four quarters. However, the company is expected to report revenue growth of 11.4%. The stock has a solid Growth and Momentum Score of B each and falls under a top-ranked Zacks industry (top 37%).
Amazon currently has an average brokerage recommendation (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 40 brokerage firms. The current ABR compares to an ABR of 1.20 a month ago based on 38 recommendations.
Of the 40 recommendations deriving the current ABR, 35 are Strong Buy and four are Buy. Strong Buy and Buy, respectively, account for 87.5% and 10% of all recommendations. A month ago, Strong Buy made up 84.21%, while Buy represented 10.53%.
Based on short-term price targets offered by 39 analysts, the average price target for Amazon comes to $169.51. The forecasts range from a low of $118.00 to a high of $230.00.
What to Watch?
In its last earnings release, the world's largest online retailer said it expects revenues in the range of $138-$143 billion for the third quarter of 2023.
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 19 stocks in its basket. Amazon is the top firm, accounting for 24.5% of the portfolio (read: 5 ETF Areas & Stocks to Win on Upbeat September Retail Sales).
ProShares Online Retail ETF has amassed $87.6 million in its asset base and currently trades in a moderate volume of around 11,000 shares a day on average. It charges 58 bps in annual fees from investors.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 300 stocks in its basket. Of these, Amazon takes the top spot with a 21.7% share.
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.1 billion in its asset base while trading in a good volume of around 70,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 307 stocks in its basket. Of these, Amazon occupies the top position, with a 21.6% allocation. Broadline Retail takes the largest share at 24%, while automobile manufacturers, restaurants, and home improvement retail round off the next three spots (read: ETFs That Could Be Impacted by the Student Loan Payment Restart).
VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 58,000 shares a day. The product has managed about $4.5 billion in its asset base and carries a Zacks ETF Rank #1 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most popular product in this space, with AUM of nearly $15.8 billion and an average daily volume of around 5 million shares. Holding 53 securities in its basket, Amazon takes the top spot with 23.2% of assets. Broadline retail, hotels, restaurants & leisure, automobiles, and specialty retail are the top four sectors with double-digit exposure each.
Consumer Discretionary Select Sector SPDR Fund charges 0.10% in expense ratio and has a Zacks ETF Rank #1 with a Medium risk outlook.
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with a 20% share.
VanEck Vectors Retail ETF has amassed $151.9 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 4,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
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Should You Buy Amazon ETFs Ahead of Q3 Earnings?
Amazon (AMZN - Free Report) is set to release third-quarter 2023 results on Oct 26, 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 lost 0.5% over the past three months and underperformed the industry, with an average decline of 7%. The underperformance might reverse if the online behemoth comes up with an earnings beat.
This has brought ETFs — ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) — with a substantial allocation to this online behemoth in focus.
Inside Our Methodology
Amazon has an Earnings ESP of -2.11% and a Zacks Rank #2 (Buy). According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) 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 in the past 30 days for the third quarter. The Zacks Consensus Estimate implies year-over-year earnings growth of 190% for the to-be-reported quarter. Additionally, Amazon’s earnings surprise history is impressive, with a surprise of 40.96%, on average, in the last four quarters. However, the company is expected to report revenue growth of 11.4%. The stock has a solid Growth and Momentum Score of B each and falls under a top-ranked Zacks industry (top 37%).
Amazon currently has an average brokerage recommendation (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 40 brokerage firms. The current ABR compares to an ABR of 1.20 a month ago based on 38 recommendations.
Of the 40 recommendations deriving the current ABR, 35 are Strong Buy and four are Buy. Strong Buy and Buy, respectively, account for 87.5% and 10% of all recommendations. A month ago, Strong Buy made up 84.21%, while Buy represented 10.53%.
Based on short-term price targets offered by 39 analysts, the average price target for Amazon comes to $169.51. The forecasts range from a low of $118.00 to a high of $230.00.
What to Watch?
In its last earnings release, the world's largest online retailer said it expects revenues in the range of $138-$143 billion for the third quarter of 2023.
ETFs in Focus
ProShares Online Retail ETF (ONLN - Free Report)
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 19 stocks in its basket. Amazon is the top firm, accounting for 24.5% of the portfolio (read: 5 ETF Areas & Stocks to Win on Upbeat September Retail Sales).
ProShares Online Retail ETF has amassed $87.6 million in its asset base and currently trades in a moderate volume of around 11,000 shares a day on average. It charges 58 bps in annual fees from investors.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 300 stocks in its basket. Of these, Amazon takes the top spot with a 21.7% share.
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.1 billion in its asset base while trading in a good volume of around 70,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 307 stocks in its basket. Of these, Amazon occupies the top position, with a 21.6% allocation. Broadline Retail takes the largest share at 24%, while automobile manufacturers, restaurants, and home improvement retail round off the next three spots (read: ETFs That Could Be Impacted by the Student Loan Payment Restart).
VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 58,000 shares a day. The product has managed about $4.5 billion in its asset base and carries a Zacks ETF Rank #1 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most popular product in this space, with AUM of nearly $15.8 billion and an average daily volume of around 5 million shares. Holding 53 securities in its basket, Amazon takes the top spot with 23.2% of assets. Broadline retail, hotels, restaurants & leisure, automobiles, and specialty retail are the top four sectors with double-digit exposure each.
Consumer Discretionary Select Sector SPDR Fund charges 0.10% in expense ratio and has a Zacks ETF Rank #1 with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with a 20% share.
VanEck Vectors Retail ETF has amassed $151.9 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 4,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.