Amazon (AMZN) crushes estimates

By: ispeculatornew
Date posted: 01.30.2009 (4:00 am) | Write a Comment  (1 Comment)

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Am I glad that I waited before getting involved in a trade on Amazon given the fact I was probably going short, but had been worried with their results coming out. And it turned out that Amazon turned in some impressive numbers, a net income of .52$ per share for Q4, up from 0,48$ one year ago. That is a good indication that Amazon will be able to come through the current economic turmoil with some good results. The most impressive number is probably the sales growth of 18% to $6.7 billion! They were able to generate such strong numbers while maintining a gross margin above 20%. All is good it seems for the CEO Jeff Bezos heading into en environment where competitors are suffering dearly. A major part of the growth came from international markets as sales increased 19% in the quarter! It is also crushing competitors such as Ebay that have been going through much tougher times lately. The direction for the whole company is very clear for both consumers, employees and shareholders which is a great sign. “We remain relentlessly focused on serving customers with low prices, great selection and free shipping offers, including Amazon Prime,” said Jeff Bezos, founder and CEO of Amazon.com. “We’re particularly grateful for the unusually strong demand for Kindle in the fourth quarter.” By the way, if you did not know, Kindle is the largest collection of ebooks in the world, which especially with the growth of PDA’s and smart phones, has been a growth segment for Amazon.

Stock is up 11% after hours up to over 56$, a very strong performance and if it holds up, I will probably be doing a trade on it during the weekend. Not that Amazon is not a good company, far from it. But I think that its P/E ratio over 30 is very expensive, especially when you look at other companies that are expected to do well in the current downturn. There are many possible ways to do the trade and I’d love to get suggestions but let’s just say that I doubt AMZN is the only company that can generate growth in this environment, and some of the alternatives are trading at P/E’s under 20.

So expect a 3rd trade for 2009 to be made on Monday! I will have it published in the morning and act on it

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1 Comment

  1. […] had been almost confirmed from my post on Friday, yes I am ready to trade on Amazon. While I do like their recent growth and they did have some […]

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