Amazon Stock To Continue Gains?

by Trefis Team
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AMZN
Amazon
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Amazon (NASDAQ: AMZN) is scheduled to report its fiscal Q2 2021 results on Thursday, July 29. We expect AMZN to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenue and earnings figures in each of the last four quarters. In the past year, due to the pandemic, people turned to e-commerce and online marketplaces for their day to day needs which converted into a high growth in revenue for the company. The momentum continued in Q1 2021 as revenue grew by 44% for the quarter. The company also continues its expansion into different segments. 

Our forecast indicates that Amazon’s valuation is $4241 per share, which is 15% above the current market price of $3703. Look at our interactive dashboard analysis on Amazon’s pre-earnings: What To Expect in Q2? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q2

Trefis estimates AMZN’s fiscal Q2 2021 revenues to be around $126.59 billion, 10% above the $115.1 billion consensus estimate. Consumers’ shift toward e-commerce and online marketplaces has been a tailwind for revenue growth. We expect the momentum generated over the last few quarters to continue in the second quarter of FY2021. Overall, we expect revenue of around $488 billion in FY2021. Our dashboard on Amazon‘s revenues offers more details on the company’s segments.

(2) EPS likely to beat the consensus estimates

AMZN’s Q2 2021 earnings per share (EPS) is expected to be $13.50 per Trefis analysis, above the consensus estimate of $12.22. The company’s net income margin has continuously risen over the years. The removal of lockdowns and steady growth in the rate of vaccination has contributed to a revival in demand across sectors. Altogether, the company is likely to report an EPS of around $63.46 in FY2021.

(3) Stock price estimate 15% above the current market price

Going by our Amazon’s valuation, with an EPS estimate of around $63.46 and a P/E multiple of 66.8x in fiscal 2021, this translates into a price of $4241, which is 15% above the current market price of around $3703.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

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