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What to Expect Ahead of Amazon's (AMZN) Q3 Earnings Release?

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Amazon AMZN is scheduled to report third-quarter 2021 results on Oct 28.

For the third quarter, the company expects net sales between $106 billion and $112 billion. The figure is anticipated to improve 10-16% on a year-over-year basis.

The Zacks Consensus Estimate for net sales is pegged at $111.85 billion, indicating growth of 16.3% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $8.72 per share, which suggests a decline of 29.5% from the year-ago quarter’s reported figure.

The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 63.75%.

Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. Price and EPS Surprise
Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote

Prime, Retail & Streaming Momentum to Aid

Amazon’s strengthening distribution network, and Prime-enabled fast delivery and grocery services are expected to have aided the performance of its e-commerce business in the to-be-reported quarter.

Prime benefits, which include a strong loyalty system, customer-friendly offers, quick grocery delivery services, robust Prime Free One-Day and Prime Free Same-Day Delivery services, are expected to have aided Amazon’s customer momentum in the quarter under review.

Apart from these, the company’s aggressive stance on the core retail industry, especially grocery retail, is expected to have benefited the quarterly performance.

An expanding footprint of Amazon Fresh grocery stores across the United States is anticipated to have contributed well to the company’s grocery sales in the third quarter.

The company’s strengthening footprint in countries like India, Canada, the U.K. and Australia are expected to have bolstered its efforts toward expanding in the global retail market.

It launched Amazon Global Store on 11st’s platform in the quarter under review in a bid to boost its e-commerce reach in Korea.

Growing online shopping orders amid the pandemic are likely to have driven the company’s online sales growth in the third quarter.

Amazon’s expanding fulfillment network as well as delivery capacity is likely to have been another tailwind.

In the to-be-reported quarter, the company commenced operations at its new fulfillment center based in Fargo, ND, in order to meet the growing online demand.

Further, it opened two delivery stations in Maryland, out of which one is located in Hanover and the other is located in Baltimore.

The company began Amazon Air Hub operations at the Cincinnati/Northern Kentucky International Airport in order to bolster its cargo network in the United States.

All these endeavors are likely to have strengthened Amazon’s competitive edge against retailers like Walmart WMT, Target TGT and Kroger KR in the to-be-reported quarter.

Coming to streaming services, solid momentum across Prime Video is anticipated to have been a major tailwind in the soon-to-be-reported quarter. Expanding original content and overall content portfolio on Prime Video are likely to have accelerated Prime engagement further.

Additionally, gains from the growing momentum across Amazon Music are expected to get reflected in the company’s third-quarter results.

AWS Portfolio Strength to Consider

The company’s expanding Amazon Web Services (“AWS”) portfolio is expected to have benefited the third-quarter performance.

Amazon unveiled three capabilities for Amazon Connect namely, Amazon Connect Wisdom, Amazon Connect Voice ID and automated outbound communications, which are well-equipped to aid contact centers in delivering better customer services.

The company made its new capability in QuickSight called Amazon QuickSight Q and Amazon Managed Service for Prometheus generally available. Amazon made its new storage service called Amazon FSx for NetApp ONTAP generally available as well.

Amazon made its fully managed data visualization service called Amazon Managed Grafana generally available. The service allows customers to track operational and IoT data from various sources by creating Grafana dashboards seamlessly.

The company made its fully managed in-memory database — Amazon MemoryDB for Redis —generally available. Amazon MemoryDB is Redis-compatible, which helps in the storage of the entire datasets in memory.

Amazon announced the general availability of Amazon EBS io2 Block Express volumes, which bolstered AWS’s storage area network capabilities.

The company announced the general availability of Amazon Healthlake, which extracts and analyzes important health-related information, and securely stores them on the cloud.

We expect all these initiatives to have helped Amazon win customers. This, in turn, is expected to have boosted AWS’s third-quarter revenues.

Smart Device Portfolio

Amazon’s expanding portfolio of Echo smart speakers is expected to have contributed well to its third-quarter performance. Notably, Amazon unveiled the Echo Show 15 in the quarter to be reported.

The e-commerce giant unveiled the Fire Kids Pro tablet for kids of 6-12 years and the next-generation Fire HD 10 Kids tablet for kids of 3-7 years.

The company launched a home robot called Astro, which rolls around the house autonomously. It introduced Halo View, Halo Nutrition and Halo Fitness in a bid to expand its personal health monitoring efforts.

Amazon introduced the first doorbell from Blink, namely Blink Video Doorbell, in a bid to expand its portfolio of smart home security products.

Apart from these, the company in partnership with Best Buy unveiled two series of smart TVs from Pioneer and Toshiba, which have built-in Fire TV.

The impacts of all these endeavors are expected to get reflected in the company’s upcoming results.

However, the impacts of the accelerating coronavirus-led expenses might get reflected in third-quarter results.

Currently, Amazon carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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