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Should You Buy Amazon (AMZN) Stock Ahead of Q2 Earnings?
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Shares of Amazon (AMZN - Free Report) surged 1.5% during regular trading hours Tuesday just two days before the e-commerce firm is set to report its second-quarter financial results. The question is should investors buy AMZN stock ahead of its Q2 earnings release?
Overview
Amazon’s massive online sales portal and ultra-fast delivery have reshaped the way many people view retail and forced the likes of Walmart (WMT - Free Report) , Target (TGT - Free Report) , Costco (COST - Free Report) , and many others to revamp and modernize their business models. But despite all of the headlines and talk that Amazon is prepared to destroy the rest of the retail industry, the company most often benefits consumers and may help other retailers in the long-run—which should theoretically help Amazon avoid any legitimate antitrust concerns.
Meanwhile, Amazon’s cloud hosting business currently competes against the likes of Microsoft (MSFT - Free Report) , Google (GOOGL - Free Report) , and IBM (IBM - Free Report) . Jeff Bezos’ company is also expanding its Amazon Prime Video service, actively adding more live sports offerings, as it aims to take on Netflix (NFLX - Free Report) , Hulu, and soon enough Disney (DIS - Free Report) and Apple (AAPL - Free Report) .
Still, despite Amazon’s growing AWS business and its plans to enter a seemingly endless amount of industries, the company remains a retail firm at its core. Amazon’s revenues surged 43% to touch $51 billion last quarter, with online store sales accounting for $26.94 billion or roughly 52% of total Q1 revenue. On top of that, physical store sales hit $4.26 billion and third-party seller services reached $9.27 billion. Therefore, Amazon’s overall retail unit accounted for nearly 80% of total Q1 revenue.
Stock Movement
Shares of Amazon have skyrocketed 244% over the last three years, which destroys the S&P 500’s 36% climb and its industry’s 77% surge. This trend continued during the last 24 months and over the past year—with AMZN stock up approximately 76%.
Valuation
Moving on, AMZN is currently trading at 106.4X forward 12-month Zacks Consensus EPS estimates, which marks a massive premium compared the S&P’s 17.3X. But, at this point, anyone who invests in AMZN understands that this stock is far from a value play and should be considered purely based on its outstanding growth potential. Plus, Bezos has actively pursued rapid expansion over almost everything else.
Outlook
Amazon is expected to see its Q2 revenues soar by roughly 41% from the year-ago period to touch $53.45 billion, based on our current Zacks Consensus Estimates. Looking a bit further ahead, AMZN’s full-year sales are projected to reach $237.83 billion, which would mark nearly 34% growth.
At the other end of the income statement, AMZN’s adjusted quarterly earnings are expected to skyrocket 522% from $0.40 per share to $2.49 per share. Amazon’s fiscal 2018 EPS figure is expected to expand by nearly 179%. But, management rarely provides earnings guidance, so its bottom line figures tend to vary somewhat widely.
Earnings Revisions Trends
Amazon has seen mixed earnings estimate revisions for both Q2 and the full-year over the last 60 days. Yet, AMZN’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for earnings of $2.81 per share, which comes in far above our current $2.49 per share consensus estimate.
Furthermore, Amazon has topped our quarterly earnings estimates in seven out of the last 10 quarters. Investors should note that Amazon has either posted a huge earnings beat or a major earnings miss during this period.
Bottom Line
Amazon is currently a Zack Rank #2 (Buy) and is expected to see its quarterly revenues soar once again. Lastly, investors who want to buy shares of AMZN must always ask themselves if they see the company fading away or Amazon’s stock price going down significantly, anytime soon.
Make sure to check back here for our full analysis of Amazon’s actual Q2 results after market close on Thursday!
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Should You Buy Amazon (AMZN) Stock Ahead of Q2 Earnings?
Shares of Amazon (AMZN - Free Report) surged 1.5% during regular trading hours Tuesday just two days before the e-commerce firm is set to report its second-quarter financial results. The question is should investors buy AMZN stock ahead of its Q2 earnings release?
Overview
Amazon’s massive online sales portal and ultra-fast delivery have reshaped the way many people view retail and forced the likes of Walmart (WMT - Free Report) , Target (TGT - Free Report) , Costco (COST - Free Report) , and many others to revamp and modernize their business models. But despite all of the headlines and talk that Amazon is prepared to destroy the rest of the retail industry, the company most often benefits consumers and may help other retailers in the long-run—which should theoretically help Amazon avoid any legitimate antitrust concerns.
Meanwhile, Amazon’s cloud hosting business currently competes against the likes of Microsoft (MSFT - Free Report) , Google (GOOGL - Free Report) , and IBM (IBM - Free Report) . Jeff Bezos’ company is also expanding its Amazon Prime Video service, actively adding more live sports offerings, as it aims to take on Netflix (NFLX - Free Report) , Hulu, and soon enough Disney (DIS - Free Report) and Apple (AAPL - Free Report) .
Still, despite Amazon’s growing AWS business and its plans to enter a seemingly endless amount of industries, the company remains a retail firm at its core. Amazon’s revenues surged 43% to touch $51 billion last quarter, with online store sales accounting for $26.94 billion or roughly 52% of total Q1 revenue. On top of that, physical store sales hit $4.26 billion and third-party seller services reached $9.27 billion. Therefore, Amazon’s overall retail unit accounted for nearly 80% of total Q1 revenue.
Stock Movement
Shares of Amazon have skyrocketed 244% over the last three years, which destroys the S&P 500’s 36% climb and its industry’s 77% surge. This trend continued during the last 24 months and over the past year—with AMZN stock up approximately 76%.
Valuation
Moving on, AMZN is currently trading at 106.4X forward 12-month Zacks Consensus EPS estimates, which marks a massive premium compared the S&P’s 17.3X. But, at this point, anyone who invests in AMZN understands that this stock is far from a value play and should be considered purely based on its outstanding growth potential. Plus, Bezos has actively pursued rapid expansion over almost everything else.
Outlook
Amazon is expected to see its Q2 revenues soar by roughly 41% from the year-ago period to touch $53.45 billion, based on our current Zacks Consensus Estimates. Looking a bit further ahead, AMZN’s full-year sales are projected to reach $237.83 billion, which would mark nearly 34% growth.
At the other end of the income statement, AMZN’s adjusted quarterly earnings are expected to skyrocket 522% from $0.40 per share to $2.49 per share. Amazon’s fiscal 2018 EPS figure is expected to expand by nearly 179%. But, management rarely provides earnings guidance, so its bottom line figures tend to vary somewhat widely.
Earnings Revisions Trends
Amazon has seen mixed earnings estimate revisions for both Q2 and the full-year over the last 60 days. Yet, AMZN’s Most Accurate Estimate—the representation of the most recent analyst sentiment—is calling for earnings of $2.81 per share, which comes in far above our current $2.49 per share consensus estimate.
Furthermore, Amazon has topped our quarterly earnings estimates in seven out of the last 10 quarters. Investors should note that Amazon has either posted a huge earnings beat or a major earnings miss during this period.
Bottom Line
Amazon is currently a Zack Rank #2 (Buy) and is expected to see its quarterly revenues soar once again. Lastly, investors who want to buy shares of AMZN must always ask themselves if they see the company fading away or Amazon’s stock price going down significantly, anytime soon.
Make sure to check back here for our full analysis of Amazon’s actual Q2 results after market close on Thursday!
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>