Amazon.com (AMZN) Stock Gains After Bringing Physical Good Sales to Mexico

NEW YORK (TheStreet) -- Shares of Amazon.com (AMZN) were gaining 1.1% to $434.90 Tuesday after the online retailer started offering physical goods in Mexico.

Amazon will now sell physical goods to Mexico through its Amazon.com.mx website. The company previously only sold e-books and other digital goods in the country.

The company will also third-party sellers will be able to sell to customers in Mexico with no product listing fees.

In a separate announcement Amazon announced that it will now offer its Amazon Wed Services (AWS) in India by 2016. AWS offers cloud computing services for a variety of companies.

"Tens of thousands of customers in India are using AWS from one of AWS's eleven global infrastructure regions outside of India," Andy Jassy, Senior Vice President, AWS said. "Several of these customers, along with many prospective new customers, have asked us to locate infrastructure in India so they can enjoy even lower latency to their end users in India and satisfy any data sovereignty requirements they may have."

Insight from TheStreet's Research Team:

Amazon is a core holding of Bryan Ashenberg's GrowthSeeker.com Portfolio. During the most recent weekly roundup, this is what Bryan had to say about the stock: 

Amazon.com (Consumer Discretionary -- AMZN:Nasdaq, 41 shares, 3.73%; $475 price target): Amazon's shares traded 1% lower this week. On Monday, Piper Jaffray reiterated its Overweight rating and $520 price target on the stock. The analyst believes the company's rollout of same-day shipping and same-hour deliveries is creating a large defensive moat and allowing the company to compete with a traditional retailer in a way not previously possible.

Earlier in the week, Oracle (ORCL:Nasdaq) commented that it was going to enter the Infrastructure-as-a-Service market and that it planned to be aggressive on price. We expect the business to be more than just evaluated in competitive situations on price alone and believe Amazon Web Services (AWS) has a strong customer base with proven expertise and functionality. We don't expect significant impact from this announcement. While we are not looking for Amazon to maximize near-term profitability, we believe a focus on profitability needs to continue to be in the forefront of management's efforts. Amazon's first-quarter results and the newfound information on the marked profitability of the Amazon Web Services segment lead us to conclude that the stock remains undervalued.

Despite the company's improved profitability -- and maybe even because of it -- we believe management will continue to spend heavily and invest to dominate the markets in which Amazon does business. And as AWS shows, management knows what they are doing and Wall Street will have to be patient. We remain long-term bullish on the company as it continues to spend on growth initiatives, including Fire TV, Fire Phone, Prime Instant Video, Prime Music, grocery, international, Sunday delivery, Echo and new fulfillment and sorting centers that enable same-day delivery, at the expense of -- but not with total disregard for -- near- term profits.

-Bryan Ashenberg, "Growth Seeker Weekly Summary," originally published 6/29/15 on GrowthSeeker.com

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 solid stock price performance, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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

  • Compared to its closing price of one year ago, AMZN's share price has jumped by 34.40%, exceeding the performance of the broader market during that same time frame. Although AMZN had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.8%. Since the same quarter one year prior, revenues rose by 15.1%. 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 -$1,499.00 million or 40.08% when compared to the same quarter last year. Despite an increase in cash flow, AMAZON.COM INC's average is still marginally south of the industry average growth rate of 40.67%.
  • 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 152.8% when compared to the same quarter one year ago, falling from $108.00 million to -$57.00 million.
  • 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

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