NEW YORK (TheStreet) --Shares of Amazon.com Inc. (AMZN) - Get Amazon.com, Inc. Report are higher by 0.74% to $376 in pre-market trading on Friday, after the company received approval from federal regulators to begin testing delivery drones.
On Thursday, the FAA issued an "experimental airworthiness certificate" to Amazon Logistics Inc., one of the e-commerce company's business units.
The certificate will allow for flights over private, rural land in Washington State as Amazon moves close to achieving its goal of delivering packages to customs by air via drones.
The public has voiced some concerns over Amazon's planned drones regarding safety and privacy issues, according to Reuters.
The certificate does come with limitations, Amazon can only use one particular drone and if it makes any modifications to the aircraft, or flies a new version it must apply for new certification. The drone may not fly above 400 feet and must be kept in sight and can only fly during daylight hours.
Additionally, drone operators are required to have a private pilot license and current medical certification, and Amazon must keep regulators updated with monthly data reports.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "You buy Amazon because they are going to break out Amazon Prime and you will see how much money they can make. Be careful, though, it's a cult stock and I have written extensively about how that's playing with fire."
Separately, 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 revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $6,715.00 million or 20.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.39%.
- The debt-to-equity ratio of 1.50 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, AMZN maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, AMAZON.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: AMZN Ratings Report