Amazon’s Stock To Continue Rally As Earnings Beat Estimates?

AMZN: Amazon logo

Amazon (NASDAQ: AMZN) is scheduled to report its fiscal Q1 2021 results on Thursday, April 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 three 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 company also continues its expansion into different segments. Last month, Amazon became the first streaming service to sign a 10-year agreement with the National Football League to exclusively broadcast the Thursday Night Football games starting 2023.

Our forecast indicates that Amazon’s valuation is $3946 per share, which is 16% above Monday’s closing price of $3409. Look at our interactive dashboard analysis on Amazon’s pre-earnings: What To Expect in Q1? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q1

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Trefis estimates AMZN’s fiscal Q1 2021 revenues to be around $111 billion, 6% above the $104 billion consensus estimate. AMZN’s revenues of $386 billion for the full year 2020 were well above its 2019 figure, as the shift toward e-commerce and online marketplaces became a tailwind for revenue growth. We expect the momentum generated over the last year to continue in the first quarter of FY2021. Overall, we expect revenue of around $111 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 Q1 2021 earnings per share (EPS) is expected to be $10.85 per Trefis analysis, above the consensus estimate of $9.54. The company’s net income margin rose in 2020. This increased the EPS figure from $23.46 in 2019 to $41.83 in 2020. 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 $56.11 in FY2021.

(3) Stock price estimate 16% above the current market price

Going by our Amazon’s valuation, with an EPS estimate of around $56.11 and a P/E multiple of 70.3x in fiscal 2021, this translates into a price of $3946, which is 16% above the current market price of around $3409.

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

While Amazon may have moved, it is helpful to see how its peers stack up. Check out Apple Peer Comparisons to see how Apple compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

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