The investment firm reasoned there was a surprise deceleration in revenue and paid unit growth trends in its recent quarter. Also, a proprietary survey has indicated that raising Amazon Prime price would result in drop of renewals.
Must Read: Building the 'Google for Data'TheStreet Ratings team rates AMAZON.COM INC as a Buy with a ratings score of B-. The team has this to say about their recommendation: "We rate AMAZON.COM INC (AMZN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMZN's revenue growth has slightly outpaced the industry average of 15.3%. Since the same quarter one year prior, revenues rose by 20.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AMAZON.COM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AMAZON.COM INC turned its bottom line around by earning $0.58 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $0.58).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 144.9% when compared to the same quarter one year prior, rising from $98.00 million to $240.00 million.
- Net operating cash flow has slightly increased to $5,578.00 million or 9.78% when compared to the same quarter last year. In addition, AMAZON.COM INC has also modestly surpassed the industry average cash flow growth rate of 7.91%.
- Powered by its strong earnings growth of 142.85% and other important driving factors, this stock has surged by 35.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: AMZN Ratings Report