Amazon Set to Report Q2 Earnings: What's in Store for the E-Commerce Giant?
Amazon AMZN has been riding the coat tails of its aggressive retail strategies and distribution capabilities into another successful year. Amazon was able to continue its growth in the first quarter of 2019, and is looking to carry over that success into the second quarter. The company is a component of the FANG stocks: Facebook FB, Amazon, Netflix NFLX, and Alphabet’s Google GOOGL. Netflix reported its second quarter earnings last week, and it resulted in falling shares as the streaming giant lost U.S. subscribers and was unable to hit their international subscriber growth estimate. The remaining three FANG counterparts are set to report their Q2 earnings this week. Let’s take a look at Amazon in particular and see what to expect from the e-commerce giant.
Company Overview and Q1 Performance
The Seattle, Washington-based company has been a leader in online retail for quite some time now, and has been able to spread its operations into a variety of outlets. The company’s Amazon Web Services is now a heavy hitter in the cloud computing market. Furthermore, the company’s Prime program has been fueling Amazon’s momentum in the e-commerce market. Rival companies struggle to keep up with Amazon’s logistics, price, and convenience, which has furthered the divide between Amazon and the rest of the pack. The company’s success in 2018 with Prime Day seemingly created a new consumer holiday. This year’s Prime Day, which was extended to 48 hours, is expected to shatter the records set last year. Additionally, Amazon’s AI driven Alexa is equipped with over 90,000 skills, and is an important method of collecting information from households as it stores everything it hears into the cloud.
In the first quarter of 2019, Amazon was able to bring in $59.7 billion in revenue which was a 17% jump year over year. Earnings wise, Amazon was able to report earnings of $7.09 per share for a year over year surge of 116.8%. The company brought in $34.3 billion in net product sales, which was an 8.5% increase. Net service sales totaled $25.4 billion in Q1, representing a year over year increase of 30.8%. Net income saw a dramatic increase in the first quarter, as the company generated $3.56 billion in profit for a 118.6% increase from the year ago quarter. The e-commerce giant also made solid geographic strides; North American net sales went up 16.56% to $35.8 billion and international sales increased 8.85% to $16.2 billion.
In addition, Amazon’s subscription services went up 40% from Q1 2018 by generating $4.34 billion. Amazon was also able to step up its cloud game as AWS brought in roughly $7.7 billion for a 41.4% surge.
Q2 Outlook
Year over year estimates are currently calling for a top line rally of 18.2% and a bottom line hike of 4.34%; earnings and revenue are expected to come in at $5.29 per share and $62.5 billion. Our Key Company Metric Estimates are projecting for net product sales to jump 9.26% to $34.8 billion. Net services sales are expected to leap over 34% from the year ago quarter to $28.2 billion.
The success Amazon has had with improving their retail subscription services is expected to continue in Q2 with a 35.1% hike to $4.6 billion. Key Company Metric Estimates are also projecting the company’s international net sales to make a 12.67% rally to roughly $16.5 billion. In addition, North American net sales are estimated to improve year over year by 16.7% to $37.5 billion.
Amazon is currently sitting at a Zacks Rank #2 (Buy) with a Style Score of B in Growth. Amazon is expected to be able to continue its year over year growth in Q2 on the earnings and revenue front. The company has been able to consecutively surpass our Consensus Estimates the past four quarters for an average EPS surprise of 60.25%. Amazon’s estimate revisions have been trending in the right direction lately, as estimates have unanimously been revised higher for the current quarter. The company’s ability to provide unrivaled delivery times and prices for its Prime members has established its stronghold within the e-commerce market. Amazon has been able to make top and bottom-line improvements, and estimates for 2019 and 2020 are projected to follow suit.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
