What do the Kindle maker and NFL hopeful Sergio Kindle have in common?
Their stocks took a beating last night.
The outside linebacker slipped out of the first round during last night's NFL draft. Amazon.com's (Nasdaq: AMZN) shares also took it on the chin, despite delivering yet another blowout quarter.
The leading online retailer opened lower this morning, even in the face of some impressive numbers. Net sales soared by 46% to $7.13 billion. The top-line surge would have still been an impressive 42% without favorable foreign exchange fluctuations. Net income rose by 68%, at $0.66 a share. Analysts were perched below both marks.
There were a few other interesting nuggets in last night's report.
- North American sales grew faster than Amazon's business overseas.
- Electronics and other general merchandise surpassed media to become Amazon's top category.
- There were no hard metrics on the Kindle, but it remains the company's best-selling product.
Amazon, quite frankly, is operating at an entirely different level from smaller e-tailers or bricks-and-mortar chains with online storefronts. Smaller Web-based retailers and marketplace operators will be posting their results in the coming days, and none of them is projected to even come close to Amazon's 46% spurt.
|
Company |
Q1 Estimated Growth |
|---|---|
|
Overstock.com (Nasdaq: OSTK) |
19% |
|
Blue Nile (Nasdaq: NILE) |
17% |
|
Liquidity Services (Nasdaq: LQDT) |
8% |
|
Drugstore.com (Nasdaq: DSCM) |
22% |
What's Amazon's secret sauce? Well, it's a combination of scale, brand ubiquity, and its Prime Membership program that provides free two-day delivery of Amazon-stocked goods for a flat annual fee.
The near term also appears bright for the company. It sees net sales climbing 31% to 44% for the current quarter. Analyst expectations are right at the midpoint, but Amazon has an uncanny way of underselling its momentum.
Amazon bears will naturally argue that the stock is outrageously overvalued. With $2.30 a share in trailing earnings, the stock opened this morning with a whopping profit multiple of 63. However, Amazon's business has always been kinder to dissect from a free-cash0flow perspective. Amazon has delivered $2.32 billion, or $5.11 a share, in free cash flow over the past year. A trailing multiple there of 28 isn't exactly cheap, but Amazon's heady all-weather growth clearly is worthy of a healthy market premium.
So maybe it's a good thing if Sergio Kindle and the Kindle maker are cheaper today. They'll get their turn when their name is called.
What did you think about Amazon's earnings report? Don't have an opinion on the numbers? What did you think about the first round of the NFL draft? Share your Kindle-esque thoughts in the comments box below.
