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For the second quarter, the company expects net sales between $144 billion and $149 billion. Net sales are expected to grow 7-11% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for net sales is pegged at $148.63 billion, indicating growth of 10.6% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.03 per share, which indicates a jump of 63.5% from the year-ago quarter. The figure moved 0.98% upward over the past seven days.
Image Source: Zacks Investment Research
The company has been benefiting from dominant position in the e-commerce and cloud markets. It is also riding on expanding generative AI capabilities.
Amazon has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 36.14%. The company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 48.17%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Amazon’s solid Prime momentum on the back of strong and fast delivery services, including Prime Free One Day and Prime Free Same-Day Delivery, is expected to have continued driving its prospects in the e-commerce space.
Expanding grocery services are expected to have been a positive. A strengthening distribution network, which is crucial for any e-commerce company, is likely to have contributed well.
Amazon’s growing worldwide e-commerce business, along with the expanding global footprint of Prime, is anticipated to have aided its financial performance.
The growing pharma business on the back of Prime perks is likely to have been another positive. The company offers RxPass, a Prime membership benefit, which enables Prime members to receive all of their eligible medications for one flat monthly fee of $5 and get them delivered for free.
These factors are expected to have driven growth in the company’s online retail sales in the second quarter. The consensus mark for the second quarter’s physical store sales is pegged at $5.25 billion, indicating growth of 4.5% from the figure reported in the year-ago quarter.
Amazon’s strong physical presence is expected to have benefited the quarterly performance. Growing momentum across Amazon Fresh grocery stores, Whole Foods stores and Amazon Go outlets across the United States is anticipated to have contributed well to the company’s sales in the second quarter.
Its introduction of the smart shopping cart called Amazon Dash Cart, powered by advanced computer vision technology, to deliver an enhanced shopping experience is likely to have driven momentum across its in-store shoppers in the quarter under review.
The consensus mark for the second quarter’s physical store sales is pegged at $5.25 billion, indicating growth of 4.5% from the figure reported in the year-ago quarter.
Growing relationships with third-party sellers are expected to have been a major positive. The consensus mark for sales generated by third-party sellers is pegged at $36.3 billion, indicating growth of 12.3% from the figure reported in the prior-year quarter.
Coming to streaming services, solid momentum across Prime Video is anticipated to have been a major tailwind. Expanding original content and overall content portfolios on Prime Video are likely to have accelerated Prime engagement.
Prime membership offers free access to ad-free Amazon Music, which is a plus.
Prime benefits in the retail and online streaming fields are anticipated to have continued aiding Amazon’s subscription revenue growth in the quarter under review.
The Zacks Consensus Estimate for subscription service sales is pegged at $10.83 billion, suggesting growth of 9.5% from the year-ago reported figure.
AWS Strength Boosts Cloud Momentum
Amazon’s strengthening AWS segment is expected to have contributed well to its second-quarter performance.
The expanding cloud services portfolio on the back of generative AI technology and expanding data center networks is likely to have aided the performance of AWS in the to-be-reported quarter.
The solid adoption of Amazon Bedrock, which has provided it with a breakthrough in the generative AI space, is likely to have driven AWS sales in the second quarter.
The increasing number of AWS regions and availability zones is expected to have been a positive.
The Zacks Consensus Estimate for AWS sales is pegged at $25.9 billion, suggesting growth of 16.8% from the year-ago reported figure.
Smart Device Portfolio to Consider
Amazon’s robust Fire products family, portfolio of Echo smart speakers, Blink smart security cameras and doorbells, and eero WiFi systems are expected to have continued benefiting its financial performance in the second quarter.
Strengthening Alexa features is likely to have aided Amazon in delivering a better user experience, the impacts of which, in turn, are expected to get reflected in the upcoming results.
Price Performance & Valuation
Amazon’s shares have appreciated 20.4% on a year-to-date basis, outperforming the industry and S&P 500 index’s rise of 14% and 14.6%, respectively.
AMZN has outpaced its cloud peer namely Microsoft (MSFT - Free Report) which has returned 13.5% year to date. Meanwhile, it is slightly underperforming Alphabet’s (GOOGL - Free Report) Google which has gained 20.8% year to date.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value Amazon offers investors at current levels.
Currently, AMZN is trading at a premium, with a forward 12-month P/S of 2.8X compared with the industry’s 1.66X, reflecting a stretched valuation.
Image Source: Zacks Investment Research
Investment Thesis
While a stretched valuation might be perceived as a risk, the premium is justified due to AMZN’s consistent financial performance and solid growth prospects in e-commerce and cloud.
Moreover, Amazon has a Growth Style Score of A, which is hard to ignore.
Amazon’s near and long-term prospects are expected to benefit from strong retail strategies, which include bolstering its online and offline retail presence, distribution channels, and delivery services. An expanding global presence and the growing adoption of Prime are other tailwinds. The growing footprint in the video streaming space with Prime Video is another positive.
Solid AWS momentum, coupled with a deepening focus on generative AI, is a plus. It is helping Amazon maintain its dominant cloud position.
Given the fundamental strength, growth-seeking investors should consider AMZN stock as a strong contender in their portfolios ahead of the second-quarter earnings report.
Image: Bigstock
Is Amazon (AMZN) Stock Worth Buying Ahead of Q2 Earnings?
Amazon (AMZN - Free Report) is scheduled to report second-quarter 2024 results on Aug 1.
For the second quarter, the company expects net sales between $144 billion and $149 billion. Net sales are expected to grow 7-11% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for net sales is pegged at $148.63 billion, indicating growth of 10.6% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.03 per share, which indicates a jump of 63.5% from the year-ago quarter. The figure moved 0.98% upward over the past seven days.
Image Source: Zacks Investment Research
The company has been benefiting from dominant position in the e-commerce and cloud markets. It is also riding on expanding generative AI capabilities.
Amazon has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 36.14%. The company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 48.17%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model predicts an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
AMZN has an Earnings ESP of +4.58% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors to Influence Amazon’s Q2 Results
Prime Drives Retail & Streaming Momentum
Amazon’s solid Prime momentum on the back of strong and fast delivery services, including Prime Free One Day and Prime Free Same-Day Delivery, is expected to have continued driving its prospects in the e-commerce space.
Expanding grocery services are expected to have been a positive. A strengthening distribution network, which is crucial for any e-commerce company, is likely to have contributed well.
Amazon’s growing worldwide e-commerce business, along with the expanding global footprint of Prime, is anticipated to have aided its financial performance.
The growing pharma business on the back of Prime perks is likely to have been another positive. The company offers RxPass, a Prime membership benefit, which enables Prime members to receive all of their eligible medications for one flat monthly fee of $5 and get them delivered for free.
These factors are expected to have driven growth in the company’s online retail sales in the second quarter. The consensus mark for the second quarter’s physical store sales is pegged at $5.25 billion, indicating growth of 4.5% from the figure reported in the year-ago quarter.
Amazon’s strong physical presence is expected to have benefited the quarterly performance. Growing momentum across Amazon Fresh grocery stores, Whole Foods stores and Amazon Go outlets across the United States is anticipated to have contributed well to the company’s sales in the second quarter.
Its introduction of the smart shopping cart called Amazon Dash Cart, powered by advanced computer vision technology, to deliver an enhanced shopping experience is likely to have driven momentum across its in-store shoppers in the quarter under review.
The consensus mark for the second quarter’s physical store sales is pegged at $5.25 billion, indicating growth of 4.5% from the figure reported in the year-ago quarter.
Growing relationships with third-party sellers are expected to have been a major positive. The consensus mark for sales generated by third-party sellers is pegged at $36.3 billion, indicating growth of 12.3% from the figure reported in the prior-year quarter.
Coming to streaming services, solid momentum across Prime Video is anticipated to have been a major tailwind. Expanding original content and overall content portfolios on Prime Video are likely to have accelerated Prime engagement.
Prime membership offers free access to ad-free Amazon Music, which is a plus.
Prime benefits in the retail and online streaming fields are anticipated to have continued aiding Amazon’s subscription revenue growth in the quarter under review.
The Zacks Consensus Estimate for subscription service sales is pegged at $10.83 billion, suggesting growth of 9.5% from the year-ago reported figure.
AWS Strength Boosts Cloud Momentum
Amazon’s strengthening AWS segment is expected to have contributed well to its second-quarter performance.
The expanding cloud services portfolio on the back of generative AI technology and expanding data center networks is likely to have aided the performance of AWS in the to-be-reported quarter.
The solid adoption of Amazon Bedrock, which has provided it with a breakthrough in the generative AI space, is likely to have driven AWS sales in the second quarter.
The increasing number of AWS regions and availability zones is expected to have been a positive.
The Zacks Consensus Estimate for AWS sales is pegged at $25.9 billion, suggesting growth of 16.8% from the year-ago reported figure.
Smart Device Portfolio to Consider
Amazon’s robust Fire products family, portfolio of Echo smart speakers, Blink smart security cameras and doorbells, and eero WiFi systems are expected to have continued benefiting its financial performance in the second quarter.
Strengthening Alexa features is likely to have aided Amazon in delivering a better user experience, the impacts of which, in turn, are expected to get reflected in the upcoming results.
Price Performance & Valuation
Amazon’s shares have appreciated 20.4% on a year-to-date basis, outperforming the industry and S&P 500 index’s rise of 14% and 14.6%, respectively.
AMZN has outpaced its cloud peer namely Microsoft (MSFT - Free Report) which has returned 13.5% year to date. Meanwhile, it is slightly underperforming Alphabet’s (GOOGL - Free Report) Google which has gained 20.8% year to date.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value Amazon offers investors at current levels.
Currently, AMZN is trading at a premium, with a forward 12-month P/S of 2.8X compared with the industry’s 1.66X, reflecting a stretched valuation.
Image Source: Zacks Investment Research
Investment Thesis
While a stretched valuation might be perceived as a risk, the premium is justified due to AMZN’s consistent financial performance and solid growth prospects in e-commerce and cloud.
Moreover, Amazon has a Growth Style Score of A, which is hard to ignore.
Amazon’s near and long-term prospects are expected to benefit from strong retail strategies, which include bolstering its online and offline retail presence, distribution channels, and delivery services. An expanding global presence and the growing adoption of Prime are other tailwinds. The growing footprint in the video streaming space with Prime Video is another positive.
Solid AWS momentum, coupled with a deepening focus on generative AI, is a plus. It is helping Amazon maintain its dominant cloud position.
Given the fundamental strength, growth-seeking investors should consider AMZN stock as a strong contender in their portfolios ahead of the second-quarter earnings report.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.