In the busiest week of the Q2 earnings season markets will be awaiting quarterly results from Amazon AMZN on Thursday, August 1.
Furthermore, Amazon’s stock sports a Zacks Rank #2 (Buy) as now looks like an ideal time to invest in its e-commerce growth and diverse business operations.
Amazon’s Q2 Expectations
Supporting Amazon’s e-commerce dominance has been the company’s advertising services and cloud expansion through Amazon Web Services (AWS). Advertising services revenue for Q2 is projected to leap 22% to $13 billion with AWS revenue expected to spike 17% to $25.86 billion.
Notably, Amazon is still the largest cloud provider ahead of its Magnificent Seven peers Microsoft MSFT and Alphabet GOOGL. Overall, Amazon’s Q2 sales are thought to have risen 10%, reaching $148.63 billion compared to $134.38 billion in the comparative quarter.
On the bottom line, Q2 EPS is expected to increase by 63% to $1.03 compared to $0.63 per share a year ago. Furthermore, the Zacks ESP (Expected Surprise Prediction) indicates Amazon has the potential to surpass earnings expectations with the Most Accurate Estimate pegging Q2 EPS at $1.08, 4% above the Zacks Consensus.
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Amazon has surpassed bottom line expectation for six consecutive quarters, posting an impressive average earnings surprise of 48.17% in its last four quarterly reports.
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Reasonable Valuation
With Amazon’s growth outpacing most of its big tech counterparts outside of Nvidia NVDA, the tech giant’s valuation has become more reasonable as well. After trading at very stretched premiums in the past, it’s noteworthy that Amazon’s stock has a “B” Zacks Style Scores grade for Value.
To that point, AMZN is currently trading near its cheapest P/E valuation with a forward earnings multiple of 39.7X. This is pleasantly below its five-year high of 161.3X and a 44% discount to the median of 71.8X.
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YTD Performance Comparison
Only trailing Nvidia and Meta Platform’s META price performance, Amazon’s stock is up +20% year-to-date, roughly matching Alphabet while outpacing the rest of its Magnificent Seven peers and the broader indexes.
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Bottom Line
Given its far more reasonable valuation and compelling growth, Amazon’s stock certainly looks poised for more upside if the e-commerce and cloud behemoth can indeed reach or exceed Q2 earnings expectations.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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