Amazon (NASDAQ: AMZN) has seen a 20% increase in its stock year-to-date, outperforming the S&P500 index, which has experienced a 15% rise. Its competitor eBay (NASDAQ: EBAY) has also seen a 30% increase in its stock. Amazon is set to report its fiscal Q2 2024 results on August 1, 2024, and is expected to perform well with earnings surpassing expectations and revenues meeting or slightly surpassing estimates. The company’s last quarter saw a 13% increase in net revenues to $143.3 billion, with growth in North America, International, and Amazon Web Services segments. Amazon is a market leader in e-commerce and on-demand cloud solutions, and analysts anticipate a continuation of this trend in the upcoming quarter.
Despite seeing gains of 10% in its stock from early 2021 to present, Amazon has experienced inconsistent returns, with a 2% increase in 2021, a 50% decrease in 2022, and an 81% increase in 2023. Comparatively, the S&P 500 has seen returns of 27% in 2021, a 19% decrease in 2022, and a 24% increase in 2023. These fluctuations have led to concerns about Amazon’s performance in the market, especially in comparison to other heavyweights in the Consumer Discretionary sector and megacap stars such as GOOG, MSFT, and AAPL. The Trefis High Quality Portfolio, on the other hand, has consistently outperformed the S&P 500 each year over the same period, providing better returns with less risk. This raises questions about whether Amazon will underperform the S&P in the coming months or see a strong jump in its stock price.
Analysts forecast Amazon’s valuation to be $213 per share, which is 16% higher than its current market price of around $183. Amazon’s revenues have shown steady growth in recent years, with a 12% increase to $574.8 billion in FY2023 and subsequent growth in various divisions. For Q2 2024, Trefis estimates net revenues to be around $148.83 billion, slightly exceeding the consensus estimate. Amazon’s adjusted earnings per share are expected to top the consensus, with a forecast of $1.05 per share, 2% above the consensus estimate of $1.03. The company’s adjusted net income increased significantly in FY 2023, driven by higher revenues and lower operating expenses as a percentage of revenues.
In Q1 2024, Amazon posted an adjusted net income of $10.4 billion, compared to $3.2 billion in the year-ago period. This was attributed to revenue growth and lower operating expenses. Analysts anticipate that the Q2 results will follow a similar trend. Overall, Amazon is projected to report an annual GAAP EPS of $4.12 and revenue per share of $61.48 in full-year 2024. Based on an RPS estimate of around $61.48 and a price-to-sales (P/S) multiple of just below 3.5x in fiscal 2024, Amazon’s stock price estimate is $213, representing a 16% increase from the current market price. This valuation indicates optimism about Amazon’s future performance and growth potential in the market.
