Earnings season is in full swing.
Investors have been receiving a surplus of quarterly results daily for some time now, with companies finally providing much-needed updates.
And several market titans have already unveiled quarterly results.
Now is the time for another notable company, Amazon AMZN, to release its quarterly results on February 2.n/aafter market close.
Amazon has become an e-commerce giant with global operations. The company also enjoys a dominant position in the cloud computing space with its Amazon Web Services (AWS) operations.
How does the company organize itself before the release? Let’s take a closer look.
Key metric
As many know, Amazon Web Services (AWS) has been a significant growth engine for the company, growing at a breakneck pace over the past few years.
Many will be looking at the Y/Y revenue growth rate in the segment as many companies have witnessed slowdowns in cloud computing.
Still, the Zacks consensus estimate for AWS net sales remains firm at $21.7 billion, indicating about a 25% year-over-year change.
In its most recent quarter, Amazon fell short of our consensus estimate for AWS net sales by approximately 1.3%, the second instance in the past six quarters. The graph below illustrates this.
Image source: Zacks Investment Research
Another player in the cloud computing industry, Microsoft MSFT, has already published its quarterly results. Microsoft’s intelligent cloud raked in $21.5 billion through the quarter, slightly beating our consensus estimate and growing 18% year-over-year.
Quarterly estimates
Analysts have lowered their outlook for the quarter in recent months, with four negative earnings estimate revisions being announced. The Zacks Consensus EPS estimate of $0.15 suggests a decline of around 90% year-over-year.
Image source: Zacks Investment Research
Our consensus revenue estimate remains firm at $145.4 billion, suggesting a positive change of almost 6% year-over-year. Clearly, rising costs have had an impact on the company’s profits.
Quarterly performance
Amazon has struggled to top net income estimates, falling short of Zacks’ consensus EPS estimate for three straight quarters.
In its latest release alone, Amazon fell short of the Zacks Consensus EPS estimate of around 9% and reported revenue slightly below expectations. Below is a chart showing the company’s revenue on a quarterly basis.
Image source: Zacks Investment Research
Evaluation
After a difficult year in 2022, AMZN’s valuation multiples fell sharply; the company’s forward price-to-sales ratio currently sits at 1.9X, off the five-year median of 3.3X.
Image source: Zacks Investment Research
Additionally, the company’s TTM price-to-book ratio is currently 7.7X, a fraction of the five-year median of 16.8X.
Image source: Zacks Investment Research
AMZN carries a style score of “C” for value.
put it all together
E-commerce and cloud computing giant Amazon is set to release its quarterly results on February 2n/aafter market close.
Investors will no doubt be watching the company’s AWS performance, as it has been a strong contributor to revenue and a strong engine of growth.
Analysts were bearish in their earnings outlook, with estimates pointing to lower earnings but slightly higher Y/Y revenue, a reflection of margin compression.
Additionally, the company’s valuation multiples have returned to more reasonable levels after a sharp price move in 2022.
Prior to release, Amazon AMZN carries a Zacks #3 (selling) rating paired with an ESP score of -10%.
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