So when did analysts develop the visual acuity to see beyond the next three months? As we noted in our report on the company’s earnings, Amazon’s third-quarter operating margin was a scant 0.9%. Even for retailers, that is a pretty low number. Mega-retailer Wal-Mart Stores Inc. (NYSE: WMT) posted an operating margin, excluding fuel sales, of 3.8% in its second quarter. Family Dollar Stores Inc. (NYSE: FDO) posted an adjusted operating margin of 6% in its most recent quarter. Only grocery store chain Safeway Inc. (NYSE: SWY) posted an operating margin at the same level as Amazon.
Yet over the past five years, Amazon’s share price has risen by nearly 650%, compared with a rise of 180% at Family Dollar, 60% at Safeway and 42% at Walmart.
Okay, so maybe Amazon’s stock is a bit frothy, but here is what some analysts told Reuters this morning:
- We’re increasingly positive on Amazon shares, given strong revenue growth with accelerations in media and EGM (electronics and general merchandise), both in North America and International. — J.P. Morgan
- We see consistent margin expansion, continuing through at least 2014, helping support Amazon’s seemingly lofty valuation. — Benchmark Capital
- Amazon appears to be gaining share at a more rapid pace while still investing heavily in tech and content, fulfillment capacity and international market development. — Stifel Nicolaus
No hint of short-term gain. Everyone is willing to let Amazon play the long game. Furthermore, they believe the company will not only succeed but eventually dominate.
Amazon shares were up nearly 9% Friday morning to $361.93, after posting a new all-time high of $368.37. The 52-week low is $218.18.
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