Amazon (AMZN) to Report Q4 Earnings: What's in the Cards?
Amazon AMZN is scheduled to report fourth-quarter 2022 results on Feb 2.
For the fourth quarter, the company expects net sales between $140 billion and $148 billion. Net sales are expected to grow 2-8% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for net sales is pegged at $145.37 billion, indicating growth of 5.8% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 15 cents per share, which moved 11.8% downward over the past seven days. Further, the figure suggests a decline of 89.2% from the year-ago quarter’s reported figure.
The company’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, missing it three times, with the average being 129.9%.
Amazon.com, Inc. Price and EPS Surprise
Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote
Holiday, Prime, Retail & Streaming Momentum to Aid
The company’s solid holiday performance, backed by strong holiday initiatives, is expected to have contributed well to top line growth. Notably, its selling partners witnessed record-breaking sales during the recent holiday season.
Amazon’s expanding distribution network, Prime-enabled fast delivery and robust grocery services are expected to have aided the performance of its online retail business in the fourth quarter.
Prime Free One Day service, Amazon Fresh and the robust two-hour delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods Market are expected to have continued driving customer momentum in the quarter under review.
Its expanding Same-Day Delivery service, which allows Prime members to receive their orders within five hours, to more cities in the United States is anticipated to have been a major positive.
The company’s growing worldwide e-commerce business, along with the expanding global footprint of Prime, are expected to have contributed significantly.
Its aggressive stance on bolstering the physical presence is expected to have benefited the quarterly performance.
An expanding footprint of Amazon Fresh grocery stores, 4-star stores and Amazon Go outlets across the United States is anticipated to have contributed well to the company’s sales in the fourth quarter.
Amazon’s expanding fulfillment network is likely to have been another tailwind.
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 portfolios on Prime Video are likely to have accelerated Prime engagement.
Additionally, gains from the growing momentum across Amazon Music are expected to be reflected in the company’s fourth-quarter results.
In the to-be-reported quarter, Amazon Music expanded its offerings to Prime members by unveiling a catalog of 100 million songs and the top podcasts, which are available ad-free and at no additional cost.
AWS Portfolio Strength to Consider
The company’s expanding Amazon Web Services (“AWS”) portfolio is expected to have benefited fourth-quarter’s performance.
In the fourth quarter, AWS introduced a new data management service, namely Amazon DataZone, which eases the data management process and enables data producers to govern data access seamlessly.
Further, the company bolstered its ML strength by introducing eight new capabilities for Amazon SageMaker namely - Role Manager, Model Cards, Model Dashboard, new data preparation, collaboration across data science teams, automated model validation, geospatial capabilities and Automatic conversion of notebook code into production-ready jobs.
This apart, the company introduced five new database and analytics capabilities - Amazon DocumentDB Elastic Clusters, Amazon OpenSearch Serverless, Amazon Athena for Apache Spark, AWS Glue Data Quality and Amazon Redshift which now supports multiple AWS Availability Zones deployments.
The company announced a new service called Amazon Security Lake, which is a purpose-built security data lake. It automatically centralizes an organization’s security data from cloud and on-premises sources into a purpose-built data lake.
It also announced a fully managed compute service, namely AWS SimSpace Weaver, which enables customers to deploy spatial simulations to model dynamic systems with many data points.
Further, it announced a new cloud application called AWS Supply Chain, which provides improved supply chain visibility to businesses.
Additionally, it introduced a new analytics service called AWS Clean Rooms that helps customers analyze and collaborate on collective datasets without revealing underlying data.
AWS also announced five new capabilities for Amazon QuickSight and a new serverless option for Amazon Neptune, namely Amazon Neptune Serverless.
We expect all these initiatives to have helped Amazon win customers in the quarter under review. This, in turn, is expected to have boosted AWS’s fourth-quarter revenues.
Smart Device Portfolio to Consider
Amazon’s robust Fire products family, portfolio of Echo smart speakers, Blink doorbells and eero products are expected to have contributed well to its fourth-quarter performance. Additionally, strengthening Alexa features is likely to have aided Amazon in delivering a better user experience, which, in turn, is expected to get reflected in the company’s fourth-quarter results.
Risks to Consider
Growing inflationary pressure on fuel, energy and transportation costs might have negatively impacted AMZN’s fourth-quarter performance.
A slowdown in online shopping activities, elevated staffing costs, foreign-currency headwinds and supply-chain disruptions are likely to have been a concern.
However, the impacts of the accelerating coronavirus-led expenses are anticipated to get reflected in the upcoming results.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Amazon has an Earnings ESP of -9.98% and a Zacks Rank #3 at present.
Stocks to Consider
Here are some other stocks worth considering, as our model shows that these too have the right combination of elements to beat on earnings this season.
AMETEK AME has an Earnings ESP of +0.68% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AMETEK is scheduled to release its fourth-quarter 2022 results on Feb 2. The Zacks Consensus Estimate for AME’s earnings is pegged at $1.47 per share, suggesting an increase of 7.3% from the prior-year quarter’s reported figure.
PayPal PYPL has an Earnings ESP of +3.19% and a Zacks Rank #3 at present.
PayPal is set to report its fourth-quarter 2022 results on Feb 9. The Zacks Consensus Estimate for PYPL’s earnings is pegged at $1.19 per share, suggesting an increase of 7.2% from the prior-year period’s reported figure.
Analog Devices ADI has an Earnings ESP of +1.13% and a Zacks Rank #3 at present
Analog Devices is scheduled to release its first-quarter fiscal 2023 results on Feb 15. The Zacks Consensus Estimate for ADI’s earnings is pegged at $2.59 per share, suggesting an increase of 33.5% from the prior-year quarter’s reported figure.
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