Amazing entity:
As old and new Amazon.com competitors gear up to report earnings, investors are eager to know how they plan to withstand the growth of the Jeff Bezos’ No. 1 online retailer.
NEW YORK: As old and new Amazon.com competitors gear up to report earnings, investors are eager to know how they plan to withstand the growth of the No. 1 online retailer.
So far this quarter, Amazon has been brought up in some 130 earnings calls from S&P 1500 components according to a Reuters analysis. About 50 of those came in the last week alone.
More than 30 companies reporting earnings in the following weeks mentioned Amazon during their most recent earnings call or were directly asked about threats or opportunities regarding Amazon’s growth. “Any retailer, whether it’s an online retailer or has online presence, or just brick and mortar, that tells you they are not concerned about Amazon, they are either in denial or lying,” said Steven Osinski, marketing lecturer at the Fowler College of Business at San Diego State University.
Beyond retailers like Wal-Mart and Target, and following Amazon’s planned acquisition of Whole Foods Market announced mid June, expect Amazon to pop up on earnings calls from food producers, packagers and retailers including SpartanNash and Dean Foods.
Amazon mentions in less-expected earnings calls could also give investors an idea of where analysts expect the behemoth to strike next.
“It’ll be interesting to see (Amazon CEO Jeff) Bezos’ next move in terms of wanting to expand into a certain space,” said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta.
In a sign of Amazon’s widening clout, industry bellwethers like McDonald’s, 3M and Johnson & Johnson in their latest earnings calls were asked for the first time about effects of Amazon on their businesses.
Consumer discretionary is the S&P 500 sector expected to post the smallest year-overyear earnings growth this reporting quarter, with a gain of 3.3%. Overall, earnings are seen rising 12% from last year.
Amazon’s own results weigh on the sector, as it earned 40 US cents per share instead of the US$1.42 analysts had expected. But its 25% revenue increase to US$38bil was seen as a detriment to some competitors and could weigh down expectations for their quarterly reports.
As costly as sector stocks are, Amazon has kept growing faster than most, up more than 31% year to date.
Amazon’s market cap, near half a trillion dollars, places it at about 20% of the S&P 500’s consumer discretionary sector.
Its growing clout has called for comparisons with rival Wal-Mart, whose growth in the early 2000s raised concerns it would put smaller retailers out of business.