Its new June quarter sales are 23% higher than the June quarter in 2013. Since then:
- Amazon has raised the price of its Prime service, and more customers are buying it than ever.
- Amazon joined Netflix in creating and delivering new TV series, putting $100 million per quarter into original content.
- Amazon designed, and delivered, a new phone to compete with the Apple (AAPL) iPhone on features, but did not book any sales for it.
- Amazon delivered a dongle called Fire TV that puts it even more squarely in the market against Netflix (NFLX) and Google (GOOG).
- Amazon has introduced a document storage service called Zocalo that competes with Dropbox.
- Amazon created a Netflix-for-readers service around its Kindle, at $9.99/month.
- Amazon announced plans for fresh grocery delivery in more markets, and opened six new warehouses, in part, to prepare for it.
Amazon is continuing to grow at more than 20% per year, but now that growth comes off a base of $74 billion in annual sales, not $34 billion as in 2010. So far in 2014 it has booked sales of $40 billion, and its Christmas quarters are usually 20% higher in volume than any other. My guess is it will book $90 billion in sales for the year, and the bears will claim "growth is slowing."
Fact is Amazon can make a ton of money any time it wants. It is, as Jim Cramer says, in a mode of "world domination or bust," and until it truly hits a growth wall it will keep doing what it's doing.
Stay for the ride. Go all-in.
At the time of publication, the author was long AMZN, GOOG, GOOGL and AAPL, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Now let's look at TheStreet Ratings' take on Amazon.TheStreet Ratings team rates AMAZON.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMAZON.COM INC (AMZN) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 22.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AMAZON.COM INC has improved earnings per share by 27.8% 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. This trend suggests that the performance of the business is improving. 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 ($1.09 versus $0.58).
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for AMAZON.COM INC is currently lower than what is desirable, coming in at 33.92%. Regardless of AMZN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.54% trails the industry average.
- Net operating cash flow has declined marginally to -$2,502.00 million or 5.48% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: AMZN Ratings Report