Amazon earnings ()
Retail giant Amazon (AMZN) is set to report first quarter fiscal 2017 earnings results after the closing bell Thursday.
The company’s e-commerce dominance, which continues to claim brick-and-mortar victims such as hhgregg, has become an afterthought. It’s a given that Amazon, which in Q4 beat on EPS by a whopping 19 cents, will either meet or exceed its core e-commerce revenue projections. The company’s Prime members will continue rise, quarterly revenue will grow above 20% and it can’t keep its record-breaking Echo speaker on the shelves. These measures have been taken for granted.
In the three months that ended March, the Seattle-based company is expected to earn $1.13 per share on revenue of $35.31 billion. This compares to the year-ago quarter when the company earned $1.07 per share on $29.13 billion in revenue. For the full year, ending December, EPS is expected to rise 47.7% year over year to $7.24 per share, while full year revenue of $165.26 billion would rise 21.5% year over year.
Clearly, Amazon is still expected to put up impressive growth numbers. Notably, this is even despite its massive size of over $434 billion in market cap, which is almost twice the size of Wal-Mart (WMT). What analysts will focus on during the quarter, however, is the performance of the company’s cloud platform, Amazon Web Services (AWS).
While AWS remains the clear-cut leader in the industry, it is not alone anymore. Unlike other gimme areas of the business, AWS is being pressured by competing platforms from Microsoft (MSFT) and Alphabet (GOOGL). The increased pressure has forced Amazon to cut its prices to stay ahead. And this is a big deal given that AWS is the company’s most-profitable business segment.
To be sure, Amazon is not struggling with AWS. Despite a Q4 revenue miss, AWS revenue in the fourth quarter surged 47% year over year to $3.54 billion. It’s worth watching, nonetheless, because the 47% rise marked a deceleration from 55% growth in the third quarter and 58% growth in the second quarter. Wall Street is forecasting for AWS revenue of $3.6 billion, which would mark a growth of 40%. Will that be enough?
Analysts will also focus on the company’s profit margins. Amazon continues to invest in ways to strengthen its logistics, while also expanding internationally. Plus, when combined with its grocery stores bets and Prime Video content spending, investors are likely going to take a collective deep breath and hope that CEO Jeff Bezos — as he’s known to do — pulls another rabbit out of his hat.
Amazon stock closed during Wednesday’s regular session at $909.29, up 0.18%. The stock has risen 21% year to date, besting the 6% rise in the S&P 500 Index. I continue to expect Amazon stock to reach $1,100 per share, delivering 21% returns in the next 12 to 18 months.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
