Amazon is primed for rapid growth

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The company accounts for nearly half of all online retail sales in the United States. It continues expanding its brick-and-mortar retail footprint through Whole Foods, Amazon bookstores and new checkout-free convenience locations. And every new venture, from advertising to cloud computing to, perhaps soon, healthcare, almost invariably becomes a billion-dollar business.

Wall Street expects that dominance to continue when Amazon (AMZN) reports its second quarter earning results after the bell Thursday. Analysts expect Amazon’s sales to top $53 billion for the three months ending in June, a 40% increase from the same period last year.

All of this growth comes as Amazon does something that once seemed unthinkable: it consistently turns a profit. Analysts expect Amazon to post earnings of $2.50 per share, up from 40 cents a year ago, even as the company continues investing heavily in fulfillment centers, new stores, and pricey content deals.

Canaccord Genuity analyst Michael Graham wrote in an investor note this month that Amazon has “the most robust and durable growth outlook” of any company in the FANG group, which he defines as including Facebook (FB), Netflix (NFLX) and Google (GOOGL).

Amazon Prime remains central to that growth. More than 100 million people pay for Amazon’s subscription service, which includes two-day shipping and access to a growing slate of TV shows and movies. During the quarter, Amazon raised the price of a Prime membership from $99 to $119 a year.

 

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