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Prime & AWS Likely to Boost Amazon's (AMZN) Q3 Earnings
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Amazon (AMZN - Free Report) is scheduled to report third-quarter 2018 earnings on Oct 25.
In the last reported quarter, the company’s earnings of $5.07 per share comfortably surpassed the Zacks Consensus Estimate, delivering a positive surprise of 103.6%. The figure also came well ahead of the year-ago quarter earnings of 40 cents.
Net sales of $52.89 billion came slightly below the Zacks Consensus Estimate of $53.44 billion. However, the figure surged 39.3% year over year and was within management’s guided range of $51-$54 billion.
For the third quarter, Amazon expects net sales between $54-57.5 billion, indicating a year-over-year growth rate in the range of 23-31%.
Notably, shares of Amazon have returned 51.3% on a year-to-date basis, outperforming the industry’s rally of 4.2%.
Let’s see how things are shaping up for the quarter under review.
Prime: A Key Catalyst
Amazon Prime continues to act as the key catalyst in boosting its presence in the online retail space.
Its strong loyalty system, customer friendly offers, robust delivery facilities and growing movies, audio and video content portfolio remain major positives for the company’s improving subscriber base.
During the third quarter, the e-commerce giant significantly expanded its grocery services, which include delivery as well as pick-up services.
The company rolled out its delivery service for natural and organic products such as fresh produce, everyday food items and quality meat and seafood, purchased at Whole Foods via Prime Now across U.S cities. Currently, the service is available in 53 U.S. cities.
Further, the company introduced grocery pickup service in the to-be-reported quarter. It allows Prime shoppers at Whole Foods to shop via Prime Now and pick up these groceries within 30 minutes by parking their car at a reserved pickup spot. Currently, this service is available in eight U.S. cities.
We believe these endeavors reflect its continued focus on enhancement of shopping experience.
Additionally, Amazon’s mega summer shopping event called Prime Day that happened in the beginning of the third quarter brought social benefits by enabling Prime members to save big amounts on their purchases. Also, the company helped small and medium businesses whose sales exceeded $1.5 billion due to this event.
Further, Prime members shopped more than 100 million products across the world on Prime Day. This is likely to drive Prime revenues in the third quarter.
Growing Physical Presence
Amazon’s aggressive retail strategies remain positive for its expanding footprint in the core retail sector.
During the third quarter, the company established two more Amazon Go stores that stock ready-to-eat food items like salads, sandwiches, wraps and quick eatables and grocery items along with Amazon meal kits in Seattle. There are now three cashless stores in the city.
Also, it set up two of these stores in Chicago during the quarter under review.
Additionally, Amazon has established a physical store called “Amazon 4-star”, which is a kind of brick and mortar store that will stock only stock four-star or beyond rated products by leveraging its vast consumer data.
All these are likely to boost the company’s retail position.
Strengthening AWS to Aid Growth
With growing opportunities in the cloud market, Amazon continues to witness rapid adoption of its cloud platform, AWS. This can be attributed to its expanding cloud services portfolio.
In the third quarter, AWS extended its partnership with Salesforce.com (CRM - Free Report) to ensure seamless and secured sharing of data by integrating its products with those of Salesforce.
Additionally, the company announced the general availability of high memory instances for Amazon Elastic Compute Cloud (Amazon EC2). This will aid in running large in-memory databases. It also made T3 instances for Amazon EC2 and Aurora Serverless available.
All these support AWS in gaining traction in the cloud market. Further, these will help the company in sustaining its dominance and will continue to provide competitive edge against Microsoft’s (MSFT - Free Report) Azure and Alphabet’s (GOOGL - Free Report) Google Cloud.
We believe all these factors are likely to aid the AWS revenues in the third quarter, which will help in driving top-line growth at Amazon.
Amazon’s voice assistant, Alexa is gaining traction in the market with its compatibility with numerous home automation and other devices. Further, the growing importance of virtual assistants across the world is leading to increasing proliferation of smart home devices.
Recently, the e-commerce giant introduced Alexa home safety features like Hunches, Video Doorbell and Alexa Guard to name a few. These are likely to boost Alexa’s user base.
Moreover, new entertainment features like TIDAL, Visual Alexa Blueprints, Left-Right Stereo Pairing along with other necessary features that make daily life convenient and hassle-free will continue to aid adoption of Alexa.
Additionally, the company unveiled some new Echo devices along with a few companion devices.
The new Echo devices comprising the likes of All-new Echo Dot, Echo Plus, Echo Show and Echo Auto intends to deliver enhanced smart home and car experience to users.
Moreover, the new companion devices such as Echo Wall Clock, Echo Input, Echo Sub, Echo Link and Link Amp will strengthen the performance of Echo smart speakers.
Further, the company introduced two smart home devices namely AmazonBasics Microwave and Amazon Smart Plug, which work on voice commands. While the first device helps in cooking, the second one can control fans, lights and other electrical home appliances.
All these are likely to help Amazon gain momentum in the global market for voice assistants.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Prime & AWS Likely to Boost Amazon's (AMZN) Q3 Earnings
Amazon (AMZN - Free Report) is scheduled to report third-quarter 2018 earnings on Oct 25.
In the last reported quarter, the company’s earnings of $5.07 per share comfortably surpassed the Zacks Consensus Estimate, delivering a positive surprise of 103.6%. The figure also came well ahead of the year-ago quarter earnings of 40 cents.
Net sales of $52.89 billion came slightly below the Zacks Consensus Estimate of $53.44 billion. However, the figure surged 39.3% year over year and was within management’s guided range of $51-$54 billion.
For the third quarter, Amazon expects net sales between $54-57.5 billion, indicating a year-over-year growth rate in the range of 23-31%.
Notably, shares of Amazon have returned 51.3% on a year-to-date basis, outperforming the industry’s rally of 4.2%.
Let’s see how things are shaping up for the quarter under review.
Prime: A Key Catalyst
Amazon Prime continues to act as the key catalyst in boosting its presence in the online retail space.
Its strong loyalty system, customer friendly offers, robust delivery facilities and growing movies, audio and video content portfolio remain major positives for the company’s improving subscriber base.
During the third quarter, the e-commerce giant significantly expanded its grocery services, which include delivery as well as pick-up services.
The company rolled out its delivery service for natural and organic products such as fresh produce, everyday food items and quality meat and seafood, purchased at Whole Foods via Prime Now across U.S cities. Currently, the service is available in 53 U.S. cities.
Further, the company introduced grocery pickup service in the to-be-reported quarter. It allows Prime shoppers at Whole Foods to shop via Prime Now and pick up these groceries within 30 minutes by parking their car at a reserved pickup spot. Currently, this service is available in eight U.S. cities.
We believe these endeavors reflect its continued focus on enhancement of shopping experience.
Additionally, Amazon’s mega summer shopping event called Prime Day that happened in the beginning of the third quarter brought social benefits by enabling Prime members to save big amounts on their purchases. Also, the company helped small and medium businesses whose sales exceeded $1.5 billion due to this event.
Further, Prime members shopped more than 100 million products across the world on Prime Day. This is likely to drive Prime revenues in the third quarter.
Growing Physical Presence
Amazon’s aggressive retail strategies remain positive for its expanding footprint in the core retail sector.
During the third quarter, the company established two more Amazon Go stores that stock ready-to-eat food items like salads, sandwiches, wraps and quick eatables and grocery items along with Amazon meal kits in Seattle. There are now three cashless stores in the city.
Also, it set up two of these stores in Chicago during the quarter under review.
Additionally, Amazon has established a physical store called “Amazon 4-star”, which is a kind of brick and mortar store that will stock only stock four-star or beyond rated products by leveraging its vast consumer data.
All these are likely to boost the company’s retail position.
Strengthening AWS to Aid Growth
With growing opportunities in the cloud market, Amazon continues to witness rapid adoption of its cloud platform, AWS. This can be attributed to its expanding cloud services portfolio.
In the third quarter, AWS extended its partnership with Salesforce.com (CRM - Free Report) to ensure seamless and secured sharing of data by integrating its products with those of Salesforce.
Additionally, the company announced the general availability of high memory instances for Amazon Elastic Compute Cloud (Amazon EC2). This will aid in running large in-memory databases. It also made T3 instances for Amazon EC2 and Aurora Serverless available.
All these support AWS in gaining traction in the cloud market. Further, these will help the company in sustaining its dominance and will continue to provide competitive edge against Microsoft’s (MSFT - Free Report) Azure and Alphabet’s (GOOGL - Free Report) Google Cloud.
We believe all these factors are likely to aid the AWS revenues in the third quarter, which will help in driving top-line growth at Amazon.
Amazon.com, Inc. Price and EPS Surprise
Amazon.com, Inc. Price and EPS Surprise | Amazon.com, Inc. Quote
Alexa Gaining Traction
Amazon’s voice assistant, Alexa is gaining traction in the market with its compatibility with numerous home automation and other devices. Further, the growing importance of virtual assistants across the world is leading to increasing proliferation of smart home devices.
Recently, the e-commerce giant introduced Alexa home safety features like Hunches, Video Doorbell and Alexa Guard to name a few. These are likely to boost Alexa’s user base.
Moreover, new entertainment features like TIDAL, Visual Alexa Blueprints, Left-Right Stereo Pairing along with other necessary features that make daily life convenient and hassle-free will continue to aid adoption of Alexa.
Additionally, the company unveiled some new Echo devices along with a few companion devices.
The new Echo devices comprising the likes of All-new Echo Dot, Echo Plus, Echo Show and Echo Auto intends to deliver enhanced smart home and car experience to users.
Moreover, the new companion devices such as Echo Wall Clock, Echo Input, Echo Sub, Echo Link and Link Amp will strengthen the performance of Echo smart speakers.
Further, the company introduced two smart home devices namely AmazonBasics Microwave and Amazon Smart Plug, which work on voice commands. While the first device helps in cooking, the second one can control fans, lights and other electrical home appliances.
All these are likely to help Amazon gain momentum in the global market for voice assistants.
Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>