How Amazon (AMZN) Won Christmas Yet Again

Tickers in this article: AMZN

NEW YORK (TheStreet) -- Amazon  may have been suffering as a result of UPS  delays, but all in all, the e-retailer had yet another stellar Christmas.

The Seattle-based business released statistics on Thursday indicating it dominated the holiday shopping season.

Of note:

  • On Christmas Day, Mayday response time, the person-to-person helpline for Kindle Fire, was an average 9 seconds, 6 seconds less than its goal;
  • On Cyber Monday, Amazon saw a record-breaking 36.8 million items ordered;
  • More than one million customers became new members of Prime, Amazon's premium service, in the third week of December. The service now has tens of millions of members worldwide;
  • Prime was so popular over the holiday, Amazon limited the number of signups during peak hours to avoid service disruption to existing members; and
  • Over Thanksgiving weekend, Amazon customers ordered more than five toys per second from a mobile device. In fact, mobile was so popular it accounted for more than half of items purchased throughout the holiday season.

However, Amazon wasn't the only retailer winning this holiday season. Despite fears of sluggish spending, MasterCard Advisors reports holiday sales between Nov. 1 and Dec. 24 increased 2.3% compared to a 0.7% rise in the year-ago period. 

TheStreet Ratings team rates AMAZON.COM INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate Amazon.com (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 robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

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

  • The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $1,389.00 million or 47.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 36.33%.
  • Powered by its strong earnings growth of 85.00% and other important driving factors, this stock has surged by 53.18% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 85.0% when compared to the same quarter one year prior, rising from -$274.00 million to -$41.00 million.
  • The gross profit margin for AMAZON.COM INC is currently lower than what is desirable, coming in at 32.53%. 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 -0.23% trails the industry average.
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