EC Up Almost 70%, Amazon Still Needs To Get These 3 Issues Under Control

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To say that Amazon.com (NASDAQ: AMZNAmazon.com (NASDAQ: has been one of the better performing stocks of 2015 would be an understatement. Just when everyone thinks they have the company figured out, Bezos and company rewrite the rulebook. The stock hasn’t been “cheap” by normal valuation measures for a while. That being said, analysts expect massive EPS growth between the end of this year and next. In order for this type of growth to happen, the company has three challenges it needs to take care of.

Amazon’s domestic business is doing fantastically, can it get its international division moving in the same direction?

Amazon Web Services is one of the company’s main growth engines, but it must keep up the pace.

The use of capital leases by Amazon to fund its expansion has to be brought under control, otherwise real earnings and cash flow growth will be hard to achieve.

A double-edged sword

To put into perspective the dominance that Amazon’s domestic business enjoys, we have to compare the company to a few of its competitors. WalMart (NYSE: WMTWalMart (NYSE: is the retail king that Amazon wants to knock off its throne. In the online world, one of the few real competitors that is left is eBay (NASDAQ: EBAYeBay (NASDAQ: . Though Wal-Mart sells actual goods, and eBay essentially helps sellers, a customer at any time can choose to buy online, or in store, between the three companies fairly easily.

Wal-Mart’s domestic business reported sales up almost 5% year-over-year, and the company gained 16% more online revenue versus last year. By comparison, eBay’s domestic gross merchandise volume (GMV) is a better indicator of its comparison to traditional retailers. EBay’s GMV on the domestic front increased by just 2% last quarter.

Amazon reported overall domestic revenue increased by more than 25%, and if we exclude media sales, general merchandise and electronics grew by an even more impressive 31%. As impressive as Amazon’s domestic business results are, the same can’t be said of its international division.