Amazon is now up over 1700% since inception of our Death By Amazon indices, while our equally-weighted Death By Amazon index has lagged the S&P 1500 by 70 percentage points over that period. Amazon hasn’t managed to push back above its July 9th relative performance when it rose to 5.83% of the S&P 500’s market cap. Earnings are due in 10 days, with analysts expecting EPS to rise over 70% versus a year ago on revenues 31.7% higher. Contrary to popular perception, Amazon is very profitable. For Q3, analysts forecast a 14.6% EBITDA margin versus 13.8% a year ago, meaning the company earns 17 cents of EBITDA for each dollar of new revenue. Of course, much of that comes from cloud, where competitive pressures are intensifying, but cash flow is cash flow at the end of the day. As for competitors, the fact that we’ve removed another name from our index this month (SMRT due to bankruptcy) is just more evidence of the force of Amazon at work.
Our “Death By Amazon” index was created many years ago to provide investors with a list of retailers we view as vulnerable to competition from e-commerce. In 2016, we also created our “Amazon Survivors” index which is made up of companies that look more capable of dealing with the threat from online shopping. To see how the two indices have been performing lately and view the full list of stocks that make up the indices, please read our newest report on the subject available to Bespoke Premium and Bespoke Institutional members.