Amazon Earnings Estimates
Wall street consensus expects Amazon to report EPS of $1.35 on top line of $44.67B, implying a 35% YoY growth in earnings and 25% YoY growth in revenue. The current earnings whisper number expects Amazon to report Q4 2016 EPS of $1.44, good for a 9 cent earnings surprise, implying a 44% YoY growth in EPS. As covered earlier in the post, strong holiday season sales, continuous innovations in the AWS segment, a greater share of 3P sales in the overall sales mix make a Q4 earnings beat highly probable.
Amazon Earnings History And Post-Earnings AMZN Stock Price Movement
Amazon.com, Inc. (NASDAQ:AMZN) has a very strong track record of trumping analyst estimates. The company has beaten analyst estimates in 6 out of the last 8 earnings reports. However, the recent record has been mixed, with Amazon topping earnings estimates in only 2 of the last 4 earnings announcements. The company delivered, on average, a 13.7% earnings surprise over the last 4 quarters. The post-earnings movement of AMZN stock has perfectly tracked the earnings beat record over last 4 quarters.
In the immediate trading session following the last 4 earnings announcement, Amazon stock gained an average of 5.2% when the company beat/met estimates while an earnings miss was followed by an average 6.4% drop in the stock price. Given the recent price reaction to Amazon earnings announcement, a beat/miss on the Q4 2016 numbers on Feb 2 could well decide the post-earnings movement of Amazon stock price.
Putting It All Together
Amazon.com, Inc. (NASDAQ:AMZN) is scheduled to report its Q4 2016 earnings on February 2, after the bell. Wall Street analysts expect the company to report earnings of $1.35 on revenue of $44.67B, implying strong YoY growth in topline/earnings. The current earnings whisper anticipates a 9 cent EPS beat. The likelihood of an earnings beat is also supported by recent wall street commentary and also the strong performance of Amazon through the holiday season. Investors who are convinced that Amazon will beat earnings estimates should get into the stock ahead of the earnings, as the stock has demonstrated a strong positive reaction to recent earnings beats.
However, Amazon stock also presents a solid long-term investment opportunity supported by explosive revenue/earnings growth, driven by rising Prime memberships and the rapidly growing and highly profitable AWS segment. Therefore, long-term investors should continue to accumulate Amazon stock on any dips, without worrying too much about the short-term impact of an earnings miss/earnings beat. Therefore, long-term investors should look for a partial entry into AMZN stock ahead of earnings in order to benefit from a strong earnings report and use any post-earnings pullback to buy Amazon shares at lower prices in case of an earnings miss. The Amazon growth story remains intact.
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