Amazon.com, Inc. (AMZN) Stock: Why It’s Headed For The Top

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Amazon.com, Inc. (AMZN) is making a move up in the market today. The company, one that is focused in the service industry, is presently trading at $1819.26 after a move up of 1.22% so far today. As it relates to service sector stocks, there are several factors that have the potential to lead to price movement in the market. One of the most common is news. Here are the recent headlines centered around AMZN:

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Mar-21-19 08:39PM Playbook for the Fed: Cramer’s ‘Mad Money’ Recap (Thursday 3/21/19)
07:04PM Amazon Said to Launch Video Ads on Smartphone Apps
07:01PM Jim Cramer: The Fed’s Dramatic Sea Change and What It Means for Stocks Now
06:40PM Breaking Down Nike’s (NKE) Q3 Earnings: North America, China & More
06:09PM Cramer: Investors need a new playbook now that the Fed ended rate hikes this year

However, when making a decision to invest, investors should focus on far more than news, especially in the ever complex service sector. Here’s what’s going on with Amazon.com, Inc..

Recent Trends From AMZN

While a move toward the top in a single session, like the move that we’re seeing from Amazon.com, Inc. may lead to fear in some investors, that alone should not be the basis of a decision to, or not to, invest in a stock. It’s always a good idea to dig into trends experienced by the stock for a period longer than a single trading session. In the case of AMZN, below are the returns on investment that investors have seen:

  • Weekly – Over the last seven days, AMZN has seen a change in value amounting to 7.89%.
  • Past 30 Days – The performance from Amazon.com, Inc. in the last month has been 12.15%.
  • Past Quarter – In the past quarter, the company has produced a ROI that comes to 17.26%
  • Past 6 Months – Throughout the past six months, investors have seen a change that works out to -6.27% from the stock.
  • Year To Date – Since the the last trading session of last year AMZN has generated a return of 21.12%.
  • Full Year – Lastly, throughout the past year, we’ve seen performance that comes to 14.67% from AMZN. Over this period, the stock has traded at a high price of -11.28% and a low of 39.19%.

Important Ratios

Looking at various ratios associated with a company can give prospective traders a look of just how dangerous and/or potentially profitable a an investment option might be. Below are a few of the most important ratios to think about when looking at AMZN.

Short Ratio – The short ratio is a measure of short interest. As the ratio climbs, it shows that more investors have a belief that the value of the stock is headed for the top. Across the sector, strong service sector stocks tend to carry a lower short ratio. On the other hand, we tend to see a lot of short squeezes in the industry. Nonetheless, as it relates to Amazon.com, Inc., it’s short ratio amounts to 0.75.

Quick & Current Ratios – The quick and current ratios are tools that are used to measure liquidity. Essentially, they measure the company’s abilities to pay its debts as they mature using current assets or quick assets. do have good current and quick ratios. When it comes to AMZN, the quick and current ratios work out to 0.80 and 1.10 respectively.  

Book To Share Value – The book to share value compares the the share price to the book value of assets that are owned by the company. In this case, that ratio equates to 88.88.

Cash To Share Value – Finally, the cash to share value comparison compares the amount of cash the company has on hand to the value of shares. In terms of AMZN, the cash to share value ratio works out to 85.28.

Investors Tend To Follow The Big Money

An interesting fact that I have learned so far in my short time alive, or somewhat alive has been that good investors tend to follow big money players. In general, investors that are trying to keep their investments relatively safe will pay close attention to trades made by institutional investors and those on the inside. With that said, what does the big money picture look like in regard to AMZN? Here’s what’s going on:

Institutions own 57.00% of the company. Institutional interest has moved by -0.15% over the past three months. When it comes to insiders, those who are close to the company currently own 16.10% percent of AMZN shares. Institutions have seen ownership changes of an accumulative -0.06% over the last three months.

Analyst Opinions Of Amazon.com, Inc.

Although it’s never a smart idea to avoid doing your due diligence and blindly following the thoughts of analysts, it is a smart idea to consider their thoughts in order to validate your own before making investment decisions in the service space. Here are the most recent moves that we have seen from analysts when it comes to AMZN.

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Mar-20-19 Initiated Evercore ISI Outperform $1965
Mar-15-19 Upgrade KeyBanc Capital Markets Sector Weight → Overweight $2100
Feb-01-19 Reiterated BMO Capital Markets Outperform $2300 → $2250
Jan-30-19 Reiterated The Benchmark Company Buy $2100 → $2000
Jan-09-19 Reiterated BofA/Merrill Buy $2000 → $2100

Earnings

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $39.96. In the current quarter, analysts see the company producing earnings in the amount of $4.73. Over the last 5 years, AMZN has generated revenue in the amount of $25.60% with earnings coming in at 102.00%. On a quarter over quarter basis, earnings have seen movement of 166.60% and revenue has seen movement of 19.70%.

Interested In How Many Shares Are Available?

Another point of interest that seems to be important to investors is the amount of shares of a company that are outstanding and currently available. At the moment, there are 483.70M shares of Amazon.com, Inc. outstanding. Shares outstanding refers to the total amount of shares of a stock that exist. As far as the float goes, or the amount of shares that are actually available on the retail market, AMZN has a float of 411.82M.

Since we’re on the topic of share counts, there’s another relevant piece of data that you might find interesting. That would be the short percentage of the float. Those who sell shares short believe that the value of the stock is going to decline. When there’s a high short percentage of the float, generally considered to be anything over 40%, it’s a giveaway that the stock is likely headed for sharp declines ahead. Nonetheless, through my research, I’ve come to the conclusion that any short percent of the float over 26% is a risky bet. When it comes to AMZN, the short percent of the float is 1.03%.

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