ETFs in Focus as Amazon Gears Up For Q4 Earnings

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Amazon (AMZN - Free Report) is set to release fourth-quarter 2020 results on Feb 2, after market close. Being a market leader in e-commerce, it is worth taking a look at the company’s fundamentals ahead of its results.

Amazon has gained 9.7% over the past three months, outperforming the industry’s average decline of 4.1%. This outperformance might continue given that the online behemoth has reasonable chances of an earnings beat and saw positive earnings revisions ahead of its Q4 report.

Inside Our Methodology

Amazon has a Zacks Rank #3 (Hold) and an Earnings ESP of +5.91%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The stock saw solid earnings estimate revision of 4 cents over the past 7 days for the fourth quarter. The Zacks Consensus Estimate represents a substantial year-over-year earnings growth of 9% for the to-be-reported quarter. Amazon’s earnings surprise history is impressive, with a positive earnings surprise beat of 150.68%, on average, for in the last four quarters. Additionally, the company is expected to report revenue growth of 37.6%. The stock has a top Growth Score of A but falls under a bottom-ranked Zacks industry (bottom 21%).

Amazon.com, Inc. Price, Consensus and EPS Surprise

 | The Zacks Consensus Estimate for the average target price is $3,742 with nearly 100% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.

What’s Hot

Amazon revenues and earnings are expected to benefit from the pandemic-driven e-commerce surge as well as dual tailwinds of its delayed Prime Day and a holiday shopping season. The company sold $10.4 billion worth of goods on Prime Day, up 45.2% from $7.16 billion in 2019. Amazon also smashed records in the holiday season with deliveries of more than 1.5 billion toys, home products, beauty, and personal care products, and electronics.

ETFs to Buy

Given this, ETFs with the highest allocation to this online behemoth will be in focus ahead of its earnings announcement. These funds are likely to gain if Amazon delivers an earnings beat. We have highlighted six ETFs that have AMZN as the top firm in their portfolio:

ProShares Online Retail ETF (ONLN - Free Report): Amazon makes up for 23.9% in the fund’s basket. 

Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report): It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Amazon makes up for 22.8% in the fund’s basket.

Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report): The fund carries a Zacks ETF Rank #2 with a Medium risk outlook. Amazon accounts for 22.9% share.

Vanguard Consumer Discretionary ETF (VCR - Free Report): This ETF has a Zacks ETF Rank #2 with a Medium risk outlook. Amazon has 21.6% allocation.

VanEck Vectors Retail ETF (RTH - Free Report): The fund has a Zacks ETF Rank #2 with a Medium risk outlook. Amazon makes up for 20.8% of the assets.

iShares Evolved U.S. Discretionary Spending ETF (IEDI - Free Report): Amazon makes up for 18% in the fund’s basket.