In Q2, Amazon (AMZN) rocked the investing world with heroic results wherein it beat the earnings estimate by over 200% and kept the wining momentum intact in Q3. The e-commerce behemoth came up with strong third-quarter results after the closing bell on October 22. This injected fresh optimism into Wall Street and made Amazon a $300 billion company.
The company earned 17 cents compared to the Zacks Consensus Estimate of a loss of 10 cents per share. This represents the fourth consecutive quarterly earnings beat for Amazon. The results were even more robust given Amazon’s loss of 95 cents per share in the year-ago quarter, hinting at the scale of improvement in the last one year.
Revenues climbed 23.3% year over year to $25.4 billion and were ahead of the Zacks Consensus Estimate of $24.9 billion. Persistent strength in cloud computing business was the key to its success as Amazon Web Service revenues skyrocketed 78.4%.
Also, accelerated growth in the North American market and new initiatives to lure customers to fend off competition paid off. Notably, revenues in North America grew 28.2% year over year while international revenues grew 7.8%.
In the quarter, operating cash flow grew 72% to $9.8 billion for the trailing 12 months compared with $5.7 billion for the trailing 12 months ended September 30, 2014. As far as guidance is concerned, the company projects revenue growth of 14–25% for the ongoing fourth quarter to $33.5–$36.8 billion, the high end reaching above the Zacks consensus of $35.2 billion. Amazon also expects operating income of $80 million to $1.28 billion compared with $591 million in the same period last year.
Market Impact
Based on solid results and an optimistic outlook, shares of AMZN spiked over 9.7% on October 22 to a new 52-week high in after marker hours on double the average volume. Including after-market gains, the stock is up about 100% from a year-to-date look.
Impressed by Amazon’s stellar Q3 results, several analysts should revise up the stock’s target price. Amazon has a Zacks Rank #2 (Buy). Further, the stock has a Zacks Growth Style Score of ‘A’ and Momentum Style Score of ‘B’ (read: Time for Momentum ETFs?).
Also, according to Reuters, Amazon could emerge as a big winner this holiday season surpassing the other two local players thanks to its logistics network, fantastic deals, swift delivery and gold bar offers to grab market share.
The northbound trading in the stock will definitely spread into the ETF world, especially the funds with the highest allocation to this Internet giant. Below we have highlighted some of these that would be in focus in the coming days:
