Amazon Q2 pre-earnings call: what you need to know

By Kirsteen Mackay

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Amazon (NASDAQ: AMZN) reports its FY21 Q2 Earnings on Thursday July 29. Can it beat analyst expectations and see its share price soar once again?

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Everything store Amazon (NASDAQ: AMZN) reports its FY21 Q2 Earnings on Thursday, July 29.

Amazon beat analyst estimates in its Q1 earnings to the end of March 31.

The company benefited substantially last year after the pandemic-induced lockdowns forced consumers online. This makes 2020 a tough act to follow. Nevertheless, Q1 earnings were pretty good. Can this continue throughout the rest of 2021?

Amazon share price overview

The AMZN share price has risen over 349% in the past five years. It is up 21% in the past year and 10% in the past three months.

Altogether the Amazon share price has seen some volatility along the way but is generally a popular stock.

Amazon share price – Source: Yahoo Finance

According to Koyfin data, the 12-month average share price target is $4,249. This gives a 16.8% upside from here. The majority of brokers mark AMZN stock as a Buy or Strong Buy.

As of close of business on July 22. Amazon metrics come in as follows:

  • Share Price: $3,638.03

  • Market Cap: $1.83 Trillion

  • Trailing 12-Month (TTM) Revenue: $419,13bn

  • TTM Cash and Short Term Investments: $73.27bn

  • Total Assets: $323.08bn

  • Total Debt: $101.52bn

  • Total Equity: $103.32bn

Amazon runs a fairly cost-intensive business. It owns a lot of physical fulfillment centers, and assets such as delivery trucks, drones, and stores.

But its e-commerce side of the business still has plenty of runway and its Cloud division AWS is proving popular with a growing customer base. Altogether its revenue has been steadily climbing, rising by 159% in the past five years.

In Q1, total revenue of $108.5bn came in above the guidance range of $100bn to $106bn. It was also a 43.8% increase from $75.45bn in the same quarter in 2020.

The fact it’s still growing sales year-over-year shows the pandemic advantage hasn’t dissolved.

Q2 Predictions

Amazon included some earnings guidance for Q2 in its Q1 report. This included around $1.5bn in costs related to COVID-19.

  • Net sales: between $110bn and $116bn (24% to 30% growth year-over-year)

  • Operating income: between $4.5bn and $8bn ($5.8bn Q2 2020)

Prime Day(s) took place in Q2 (June 21 & 22) so that should have helped boost quarterly sales.

Meanwhile, founder and CEO Jeff Bezos officially stepped down, therefore investors are eager to read Q3 guidance.

Amazon consistently beats earnings estimates by significant amounts. In its March quarter diluted earnings per share (EPS) came in at $15.79, so if it matches this it will beat analyst expectations again.

Amazon does not pay a dividend.

Shareholder risks

Inflation is a growing concern, and like its peers, Amazon is facing antitrust lawsuits.

Like all US tech stocks, some consider Amazon overvalued. Therefore, if the market experiences a significant correction or crash it could take a long time for it to retrace previous highs.

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In this article:

Topics:
Quarterly Earnings
Internet and Direct Marketing Retail
Industries:
Consumer Discretionary
Companies:
Amazon

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay currently holds a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.