Amazon Stock To Beat The Consensus In Q1

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Amazon (NASDAQ: AMZN) is scheduled to report its fiscal Q1 2023 results on Thursday, April 27, 2023 (after market close). We expect Amazon to top the consensus estimates of earnings and revenues. The company outperformed the street expectations in the last quarter, with net revenues increasing by 9% to $149.2 billion. It was due to a 13% rise in North America revenues and a 20% improvement in the Amazon web services (AWS) segment. That said, the positive impact was partially offset by an 8% drop in international division revenues. We expect the Q1 result to be on similar lines.

Our forecast indicates that Amazon’s valuation is $134 per share, which is 31% above the current market price of around $103. Our interactive dashboard analysis on Amazon’s Earnings Preview has more details. 

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(1) Revenues expected to top the estimates

Amazon’s revenues grew 9% y-o-y to $514 billion in FY2022. 

  • The company witnessed positive growth in net revenues from physical stores (11%), third-party seller services (14%), subscription services (11%), advertising services (21%), and AWS (29%) divisions. We expect the same pattern to continue in Q1. 
  • The net sales from the online stores category marginally decreased in the year to $220 billion. We expect the same trend to continue in Q1.
  • Overall, we forecast Amazon’s revenues to touch $560 billion for the full-year 2023.

Trefis estimates Amazon’s fiscal Q1 2023 net revenues to be around $125.99 billion, slightly above the $124.54 billion consensus estimate.

(2) EPS is likely to beat the consensus estimates

Amazon Q1 2023 adjusted earnings per share (EPS) is expected to be $0.22 per Trefis analysis, 5% above the consensus estimate of $0.21. The adjusted net income decreased from $33.4 billion to -$2.7 billion in FY 2022. It was partly due to an increase in operating expenses and partly because of an unfavorable decrease in non-operating income from $13.3 billion to -$18.2 billion. Markedly, the non-operating income primarily suffered because of a pre-tax valuation loss from an equity investment in Rivian Automotive.

We expect the operating expenses to follow the same trend in Q1. Overall, Amazon is likely to report an annual GAAP EPS of $1.71 and revenue per share (RPS) of $55.44 for the full-year 2023. 

(3) Stock price estimate is 31% higher than the current market price

We arrive at Amazon’s valuation, using an RPS estimate of around $55.44 and a price-to-sales (P/S) multiple of just above 2x in fiscal 2023. This translates into a price of $134, which is 31% above the current market price. 

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 

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 AMZN Return -1% 22% 174%
 S&P 500 Return -1% 6% 82%
 Trefis Multi-Strategy Portfolio -1% 6% 235%

[1] Month-to-date and year-to-date as of 4/26/2023
[2] Cumulative total returns since the end of 2016

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