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Can Amazon Beat Big Earnings Expectations Today?

Thursday, October 27, 2016 10:17
% of readers think this story is Fact. Add your two cents., Inc. (NASDAQ:AMZN) is set to deliver its Q3 earnings today after the closing bell. Here’s what investors can expect from the tech and retail titan.

As one of the largest companies in the world by market cap, Amazon has the sway to move the markets significantly. We can see this evidenced by the fact that AMZN boasts a massive 17% representation in the Market Vectors Retail ETF, and a 6.74% cut of the PowerShares QQQ Trust. Its results this evening could well pace the gains or declines for several major indexes and ETFs for the next several trading sessions.

Last quarter, Amazon trounced expectations as revenue surged 31% from the prior year. Wall Street analysts responded with a slew of upgrades, price target bumps, and earnings estimate reviews.

For the current quarter, analysts are expecting another blowout, with operating income and revenue estimates near the high end of the company’s outlook.

Also key in today’s report will be Amazon’s Q4 guidance. Once again, analysts expect big things here, with the consensus forecast for $1.7 billion in profit on 25% revenue gains to $44.6 billion.

Prime subscription growth will also be a big factor in the report. Amazon doesn’t discuss specific numbers for Prime, but typically gives some color on how well things are going for America’s favorite subscription club.

Investors will place a lot of emphasis on Amazon’s AWS cloud platform, which has seen tremendous growth in recent years. Analysts are looking for 50-60% continued growth there, which might be difficult to deliver, given that its pace has slowed somewhat in recent quarters.

The third quarter is typically a bit of a slow time for Amazon as it ramps up for the all-important holiday shopping season. However, given that the company has beaten on bottom line estimates in six of the last seven reports, don’t be surprised to see another breakout quarter for the world’s largest online retailer.

Amazon shares were mostly flat in Thursday afternoon trading at $822.55. Year-to-date, AMZN has gained 21.97%.


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