Will Amazon (AMZN) Stock be Helped Today by Unveiling of One-Hour Delivery Service?

NEW YORK (TheStreet) -- Amazon.com (AMZN) shares are down 1.11% to $295.57 in trading on Thursday, the same day the company unveiled its new one-hour delivery in parts of New York City.

Amazon's Prime Now delivery service promises one-hour delivery of items purchased on the site for a fee of $7.99, with the option of two-hour delivery being free for Prime customers.

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The company has been testing the service using bike messengers deployed from a building it purchased in Midtown Manhattan for the past few weeks, according to the Wall Street Journal. More than 25,000 items are eligible for Prime Now service, according to the company.

The company plans to expand the service to other cities next year which will be available to customers who purchase the company's Prime membership package for $99.

TheStreet Ratings team rates AMAZON.COM INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMAZON.COM INC (AMZN) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself, poor profit margins and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 965.9% when compared to the same quarter one year ago, falling from -$41.00 million to -$437.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • The share price of AMAZON.COM INC has not done very well: it is down 19.58% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for AMAZON.COM INC is currently lower than what is desirable, coming in at 34.98%. 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 -2.12% trails the industry average.
  • AMAZON.COM INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMAZON.COM INC turned its bottom line around by earning $0.58 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 225.9% in earnings (-$0.73 versus $0.58).
  • You can view the full analysis from the report here: AMZN Ratings Report
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