This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Can Amazon Remain Immune to Mother Nature?

NEW YORK (TheStreet) -- Amazon (AMZN - Get Report) reports first-quarter earnings tonight after the close, and investors will be looking forward to hear if the weather impacted the company's results, as it did with other retailers and e-commerce partner UPS (UPS), or if Amazon remained immune to Mother Nature.

In issuing its press release to announce first-quarter results, UPS blamed the harsh weather around the country, noting that it disrupted deliveries and impacted expenses. Given the close relationship UPS and Amazon have, this will be worth watching, notes JMP Securities analyst Ronald Josey. "We expect Amazon to report 1Q14 results that are in line with our projections although a colder winter, particularly in the Northeast, could have helped domestic eCommerce trends and we note our checks suggest improving eCommerce trends throughout the quarter, of which Amazon likely benefited." Josey rates shares "market perform."

Analysts surveyed by Thomson Reuters are expecting Amazon to earn 23 cents a share on $19.4 billion in revenue for the quarter. Analysts surveyed by Estimize are expecting Amazon to earn 25 cents a share on $19.63 billion in sales.

Must Read: Apple TV No Longer a 'Hobby,' 20M Devices Sold

When Amazon issued first-quarter guidance after releasing fourth-quarter earnings, it gave a net sales range between $18.2 billion and $19.9 billion, growing between 13% and 24%, compared with first quarter 2013. Amazon also said it expects operating income to be breakeven, plus or minus $200 million.

Investors will be looking to see whether Amazon's faster growing product lines, including digital media sales and apparel, will continue to trend upward. Goldman Sachs analyst Heath Terry, who rates Amazon "buy" with a $430 price target, believes that these two segments will allow revenue to reaccelerate, despite a slowdown in paid unit growth.

"With investor focus on paid unit growth deceleration in recent quarters and the reportedly slower start to 1Q, we believe investor expectations are modest," Terry wrote in the note. "However, with mix shifting to faster growing product lines like apparel and digital goods, continued acceleration in AWS, and a slight benefit from FX, we believe revenue growth could accelerate to 22% yoy vs. 20% in 4Q."

CEO Scott Wingo of ChannelAdvisor (ECOM), which reports same-store-sales (SSS) for both Amazon and eBay (EBAY), notes Amazon averaged 21.1% year-over-year growth, according to its SSS data. He notes the three key metrics he's watching are active users, the Electronics and General Merchandize (EGM) category, and sold-item growth.

This is the first quarter following the Amazon Prime price hike, after Amazon announced in mid-March that it was raising the price of Prime to $99 a year, up from $79.

Josey isn't looking for much in the way of revenue, but notes he will be looking to hear whether the price increase, which went into effect April 17 in the U.S., but was raised in February in the U.K. and Germany, impacted user numbers. In his letter to shareholders, CEO Jeffrey Bezos, according to Josey, noted that "adoption of Prime Instant Video in the UK and in Germany has been 'terrific' and that it was 'surpassing expectation,' which we believe is a positive early sign of streaming video adoption internationally as we await a rebound in international media revenue growth." It's unclear exactly how many Prime members there are around the world, but it's thought that there are around 20 million, a group characterized as among Amazon's most lucrative customers. "We believe there are ~15-20 million Prime members in the U.S. and that these users spend ~3-5x on Amazon when compared to non-Prime members," Josey wrote in the note.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMZN $490.48 0.00%
GOOG $684.12 0.00%
AAPL $94.27 0.00%
FB $101.00 0.00%
TSLA $143.67 0.00%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs