What's in the Offing for Amazon's (AMZN) in Q1 Earnings?

Zacks Equity Research
·5-min read

Amazon AMZN is scheduled to report first-quarter 2021 results on Apr 29.

For the first quarter, the company expects net sales between $100 billion and $106 billion. The figure is anticipated to improve 33-40% from the year-ago reported number.

The Zacks Consensus Estimate for net sales is pegged at $105.1 billion, indicating growth of 39.2% from the prior-year quarter’s reported figure.

Further, the Zacks Consensus Estimate for first-quarter earnings currently stands at $9.98 per share, which suggests an improvement of 99.2% from the year-ago reported figure.

The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. It has a trailing four-quarter earnings surprise of 160.01%, on average.

Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. Price and EPS Surprise
Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote

Prime, Retail Efforts & Streaming Momentum: Key Factors to Note

Amazon’s strengthening distribution network, and Prime-enabled fast delivery and grocery services are expected to have aided the performance of its e-commerce business in the to-be-reported quarter.

Prime benefits, which include a strong loyalty system, customer-friendly offers, quick grocery delivery services, robust Prime Free One-Day and Prime Free Same-Day Delivery services, are expected to have aided Amazon’s customer momentum in the quarter under review.

Further, the company’s strengthening global footprint in the retail market on the back of aggressive strategies, and expanding seller and buyer base is anticipated to have remained positives.

Additionally, Amazon is constantly witnessing overflowing orders amid the pandemic, which is likely to get reflected in the first-quarter results.

Apart from these, the impacts of Amazon’s aggressive stance on the core retail industry, especially grocery retail, are expected to have benefited the to-be-reported quarter’s performance.

The expanding footprint of Amazon Fresh grocery stores across the United States is anticipated to have contributed well to the company’s grocery sales in the first quarter.

Also, Amazon’s strong fashion retail efforts are anticipated to have aided its performance in the quarter under review.

All these endeavors are likely to have strengthened Amazon’s competitive edge against retailers like Walmart WMT, Target TGT and Kroger KR in the to-be-reported quarter.

Coming to streaming services, solid momentum across Prime Video is anticipated to have remained a major tailwind in the soon-to-be-reported quarter. Expanding original content and overall content portfolio on Prime Video are likely to have accelerated Prime engagement further.

Additionally, gains from the growing momentum across Amazon Music are expected to get reflected in the company’s first-quarter results. The integration of artist merchandise into the Amazon Music app, which allows users to shop artist merchandise, while streaming music, accessing live streams and watching music videos, is likely to have bolstered the subscriber baseof the app.

AWS Portfolio Strength to Consider

The company’s expanding Amazon Web Services (“AWS”) portfolio is expected to have benefited the first-quarter results.

In the first quarter, AWS made Amazon Lookout for Equipment generally available. Powered by Machine Learning (“ML”) technology, the service is well-equipped to detect anomalies in machine equipment on the back of predictive maintenance.

Further, it announced the general availability of Amazon Lookout for Metrics. Backed by ML technology, the service detects anomalies in business metrics such as revenues, active users, transaction volume, web page views and mobile app installations automatically.

Furthermore, the company made Amazon Lookout for Vision generally available. Notably, the service processesseveral images in an hour to detect defects and anomalies in manufactured products, using computer vision and ML capabilities.

Further, AWS unveiled One Zone storage classes for Amazon Elastic File System or Amazon EFS, which provides lifecycle management and integration with computing services like Amazon Elastic Kubernetes Service, AWS Fargate, Amazon Elastic Container Service and AWS Lambda.

Additionally, the company made X2gd instances for Amazon Elastic Compute Cloud or Amazon EC2 generally available.

We expect all these initiatives to have helped Amazon in winning customers. This, in turn, is expected to have driven AWS’s fourth-quarter revenues.

Robust Smart Devices Portfolio

Amazon’sexpanding portfolio of Echo smart speakers is expected to have contributed well to the first-quarter performance. Additionally, strengthening Alexa features are likely to have aided Amazon in delivering a better user experience. This, in turn, is expected to get reflected in the company’s first-quarter results.

Apart from this, its strengthening offering of Wi-Fi devices and robust smart home security camera portfolio are expected to have been beneficial in the to-be-reported quarter.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Reply) stocks here.

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