Back to top

Image: Bigstock

AWS Revenue to Be Key In Amazon's Q3

Read MoreHide Full Article

A behemoth in the market, Amazon (AMZN - Free Report) , is on deck to unveil quarterly results on October 27th, after the market close.

Amazon is one of the largest e-commerce providers, with sprawling operations across the globe.

Currently, the e-commerce titan carries a Zacks Rank #3 (Hold) with an overall VGM Score of a D.

Amazon also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service (IaaS) space, thanks to Amazon Web Services (AWS).

Revenue from the service will be closely monitored, as it’s been a solid contributor to the company’s growth trajectory.

Let’s take a deeper dive into what to expect.

AWS Sales

In Amazon’s latest quarter, AWS raked in $19.7 billion, edging out the Zacks Consensus Estimate of $19.4 billion by roughly 1.6% and reflecting a substantial 33% Y/Y uptick.

It represented the company’s fifth positive surprise on the metric out of its last six, undoubtedly a highlight.

Zacks Investment Research
Image Source: Zacks Investment Research

Throughout the most recent quarter, AWS added to its more than 200 products and services to assist customers in lowering costs, increasing agility, and innovating faster.

Clearly, Amazon's focus on the platform has paid off; AWS net sales have improved sequentially in each of its last four quarters.

The Zacks Consensus Estimate for AWS net sales for the upcoming quarter stands at $20.8 billion, indicating a 5.6% sequential improvement and a sizable 34% Y/Y uptick.

Share Performance & Valuation

Year-to-date, it’s been a bumpy ride for AMZN shares year-to-date, down just above 30% and lagging behind the S&P 500’s performance.

Zacks Investment Research
Image Source: Zacks Investment Research

AMZN’s valuation multiples have pulled back by a fair margin amid the stretch of adverse price action; the company’s 2.4X forward price-to-sales ratio is beneath its 3.3X five-year median and highs of 3.9X in 2021.

Shares trade at an 89% premium relative to the Zacks Retail and Wholesale sector.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been mixed in their earnings outlook, with a single downwards and upwards earnings estimate revision hitting the tape over the last several months. The Zacks Consensus EPS Estimate of $0.23 suggests a Y/Y earnings decline of roughly 25%.

Zacks Investment Research
Image Source: Zacks Investment Research

Amazon’s top-line appears to be in better standing; the Zacks Consensus Sales Estimate of $127.9 billion indicates an improvement of more than 15% from year-ago quarterly sales of $110.8 billion.

Bottom Line

Amazon enjoys a dominant position in the cloud computing market thanks to Amazon Web Services (AWS).

And it goes without saying that eyes will focus heavily on the metric in the earnings release.

Net sales of AWS have been strong, consistently growing on a sequential basis and repeatedly exceeding the Zacks Consensus Estimate.

As it stands, the Zacks Consensus Estimate for AWS net sales suggests solid sequential and Y/Y growth.

The e-commerce titan has struggled to exceed quarterly estimates as of late, falling short of the Zacks Consensus EPS Estimate in three of its last four prints.

Heading into the print, Amazon (AMZN - Free Report) carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -6.7%.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Amazon.com, Inc. (AMZN) - free report >>

Published in