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Amazon.com (NasdaqGS:AMZN) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Amazon.com, Inc. (NasdaqGS:AMZN) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $7.20/share on revenue of $92.489 billion. The consensus earnings per share (EPS) of $7.20/share is based on a poll of 34 analysts and represents a growth in eps of 70.1% over the same quarter last year, when the company reported earnings of $4.23/share.

The revenue forecast of $92.489 billion based on a poll of 40 analysts implies a year-over-year (YoY) growth in revenue of 32.2%. Last year the company reported $69.981 billion in revenue for the quarter.

Expected to report EPS growth of 70.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $92,489.07 $69,981.00 32.2%
EPS $7.20 $4.23 70.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Amazon.com, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.60 $10.30 543.1% Beat
Q1, 2020 $6.25 $5.01 −19.8% Missed
Q4, 2019 $3.97 $6.47 62.8% Beat
Q3, 2019 $4.49 $4.23 −5.8% Missed
Q2, 2019 $5.54 $5.22 −5.8% Missed
Q1, 2019 $4.68 $7.09 51.6% Beat
Q4, 2018 $5.51 $6.04 9.5% Beat
Q3, 2018 $3.09 $5.75 86.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 4.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $3,034 $3,165 4.3% Increase
April 30, 2020 $2,373 $2,286 −3.7% Decline
January 30, 2020 $1,858 $2,009 8.1% Increase
October 24, 2019 $1,762 $1,761 0.0% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.04, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.04 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Amazon.com, Inc. is currently trading at $3,209/share, up 0.2% for the day. The company is trading at approximately 90.3% of its 52-week high of $3,552/share. The company’s stock price is up 1.4% since the last earnings report and down −0.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 49.84 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:AMZN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 122.05 and a forward P/E multiple of 99.21.

Amazon.com, Inc.’s current share price also implies a price-to-book (P/B) multiple of 21.82. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $3,209
P/E Ratio 122.0x
P/E Ratio (Fwd) 99.2x
PEG Ratio 15.2
Total Debt / Total Capital 5.4%
Levered Free Cash Flow $26.957 billion
EV / EBITDA 41.1x

Finbox

Amazon.com, Inc. is a large-cap stock with a market capitalization of $1,607.5 billion and a total enterprise value of $1,627.5 billion. The company operates in the Consumer Discretionary sector and the Internet & Direct Marketing Retail industry.

Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It sells merchandise and content purchased for resale from third-party sellers through physical and online stores. The company also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings, and Echo and other devices; provides Kindle Direct Publishing, an online service that allows independent authors and publishers to make their books available in the Kindle Store; and develops and produces media content. In addition, it offers programs that enable sellers to sell their products on its Websites, as well as its stores; and programs that allow authors, musicians, filmmakers, skill and app developers, and others to publish and sell content. Further, the company provides compute, storage, database, and other AWS services, as well as fulfillment, advertising, publishing, and digital content subscriptions. Additionally, it offers Amazon Prime, a membership program, which provides free shipping of various items; access to streaming of movies and TV episodes; and other services. The company also operates in the food delivery business in Bengaluru, India. It serves consumers, sellers, developers, enterprises, and content creators. The company also has utility-scale solar projects in China, Australia, and the United States. Amazon.com, Inc. was founded in 1994 and is headquartered in Seattle, Washington.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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