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Amazon (AMZN) to Open New Orlando Facility, Add 1,500 Jobs


Amazon.com Inc. AMZN has announced plans of opening a new fulfillment center in Orlando.

The site, which will be highly robotized, is expected to open in 2018.

Fulfillment centers are giant warehouses that help online retailers in storing and shipping products and handling returns quickly.

Why More Facilities?

Amazon has been increasingly investing cash to build and modernize fulfillment centers. These centers are opened to primarily cut shipping costs and speed up delivery. The deployment of robots decreases the time taken to sort and pack products, thereby strengthening its same-day or overnight delivery services.

In 2016, Amazon’s capital expenditure increased 51% on a year-over-year basis and a major part of that went into the construction of 26 fulfillment centers and deployment of robotics technology inside them.

We note that in the last one year, Amazon has underperformed the Zacks Internet-Commerce industry. The stock has returned 33.3% compared with the industry’s gain of 45.1%.

Details About New Orlando Facility

According to Amazon, the new facility, spanning more than 850,000 square feet, will create more than 1,500 full-time jobs. The center will primarily focus on smaller items such as books, electronic devices and children’s toys.

Amazon stated that it pays competitive wages and gives healthcare and other full-time employee benefits to its workers. Additionally, the company offers programs like Career Choice to help employees pursue courses related to fields that are in demand. The online giant also provides other benefits such as generous maternity and parental leaves.

Our Take

Amazon has been strengthening its presence across the globe. To date, it has created millions of full-time jobs and continues to hire manpower to meet growing customer demand.

We feel, Amazon must maintain its U.S. market share while expanding globally in order to retain its leading position. For this, the company needs to invest more in fulfillment as well as technology and content, especially in international markets with less penetration and higher growth rates.

Although increased expenses might hurt the company’s bottom line in the near term, we believe this is necessary for the company to maintain its dominance in this highly competitive market.

Zacks Rank & Stocks to Consider

Currently, Amazon has a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector are Alibaba Group Holding Limited BABA, PetMed Express, Inc. PETS and JD.com, Inc. JD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alibaba Group Holding Limited delivered a positive earnings surprise of 20.53%, on average, in the trailing four quarters.

PetMed Express delivered a positive earnings surprise of 9.32%, on average, in the trailing four quarters.

JD.com, Inc. delivered a positive earnings surprise of 83.49%, on average, in the trailing four quarters.

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