Amazon (AMZN – Free Report) is one of the most searched stocks on Zacks.com these days. So it’s worth looking at some facts that could shape the stock’s performance in the short term.
Over the past month, the online retailer’s stock has returned +2.5%. This compares to a +5% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Internet Commerce industry, which includes Amazon, rose 5.5%. The key question here is: What is the future direction of the stock price?
While media reports and rumors about significant changes in a company’s business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company’s future earnings expectations above all else. That’s because we believe that the present value of future income streams determines the fair value of a stock.
Essentially, we look at how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company’s earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Amazon is expected to post earnings of $1.02 per share for the current quarter, representing a year-over-year change of +61.9%. Over the past 30 days, the Zacks Consensus Estimate has changed +9.6%.
The consensus earnings estimate for the current fiscal year of $4.54 represents a year-over-year change of +56.6%. This estimate has changed by +14.5% over the past 30 days.
Next year’s consensus earnings estimate of $5.77 represents a +27.1% change from the revenue Amazon was expected to report a year ago. Over the past month, the forecast has changed by +4%.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, effectively harnesses the power of earnings estimate revisions to provide a more definitive picture of near-term stock price direction. Provides a complete picture. The magnitude of the recent consensus estimate change, along with three other factors related to the earnings estimate, gives Amazon a Zacks Rank #3 (Hold).
The chart below shows the company’s consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There’s no question that a company’s profit growth is the best indicator of its financial health, but nothing will happen if it isn’t profitable. It’s nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it’s important to know a company’s earnings growth potential.
For Amazon, the current quarter’s consensus revenue estimate of $148.59 Billion represents a year-over-year change of +10.6%. Forecasts of $638.26 billion and $709.9 billion for the current and next fiscal year represent changes of +11% and +11.2%, respectively.
Last reported results and surprising details
Amazon reported revenue of $143.31 billion in its last reported quarter. This represents a +12.5% year-over-year change. EPS for the same period was $1.13, compared to $0.31 a year ago.
The reported earnings represent a surprise of +0.55% when compared to the Zacks Consensus Estimate of $142.53 billion. EPS surprise was +36.14%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company beat consensus revenue estimates every time during the period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock’s future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects.
The present value of a company’s valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters will help you see how reasonable its stock price is. You can get a good idea of what
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) categorizes stocks into five groups, ranging from A to F, with A being B B is better than C, and so on), and can help identify whether a stock is overvalued, fairly valued, or temporarily undervalued. Masu.
Amazon is rated B on this score, indicating that it trades at a discount compared to its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here and many other pieces of information about Zacks.com may help you decide whether the market buzz about Amazon is worth paying attention to. However, the company’s Zacks Rank #3 suggests it could outperform the broader market in the near term.
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