What To Expect From Amazon’s Stock In Q3?

Amazon’s stock (NASDAQ: AMZN) is scheduled to report its fiscal Q3 2021 results on Thursday, October 28. 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 has continued in 2021 as the shift toward e-commerce continues at a good pace. The company also continues its expansion into different segments. 

Our forecast indicates that Amazon’s valuation is $4163 per share, which is 25% above the current market price of $3319. Look at our interactive dashboard analysis on Amazon’s pre-earnings: What To Expect in Q3? for more details. 

(1) Revenues expected to be ahead of consensus estimates 

Amazon’s revenues for full-year 2020 were $386.1 billion – up 37.6% y-o-y, with high growth seen in both North America and the International segment. Trefis estimates AMZN’s fiscal Q3 2021 revenues to be around $120.5 billion, above the $111.66 billion consensus estimate. Consumers’ shift toward e-commerce and online marketplaces has driven revenue growth over the last few quarters. We expect the momentum generated to continue in the third quarter of FY2021. Overall, we expect revenue of around $486 billion in FY2021. Our dashboard on Amazon’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.

(2) EPS likely to beat the consensus estimates

AMZN’s Q3 2021 earnings per share (EPS) is expected to be $10.05 per Trefis analysis, above the consensus estimate of $8.96. 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 $56.23 in FY2021.

(3) Stock price estimate 25% above the current market price

Going by our Amazon’s valuation, with an EPS estimate of around $74.07 in FY 2022 and a P/E multiple of 56.2x, this translates into a price of $4163, which is 25% above the current market price of around $3336.

Further, our analysis of Amazon vs. Walmart  finds Amazon to be a better investment option. Also, Amazon Peer Comparisons summarizes how the company fares against peers on metrics that matter.

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