Amazon AMZN is scheduled to report fourth-quarter 2021 results on Feb 3.

For the fourth quarter, the company expects net sales between $130 billion and $140 billion. The figure is anticipated to improve 4-12% on a year-over-year basis.

The Zacks Consensus Estimate for net sales is pegged at $137.9 billion, indicating growth of 9.8% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.89 per share, which moved 0.2% downward over the past 30 days. Further, the figure suggests a decline of 72.4% from the year-ago quarter’s reported figure.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, missing the same once, the average being 38.95%.

Amazon.com, Inc. Price and EPS Surprise

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

Holiday, Prime, Retail & Streaming Momentum to Aid

The company’s solid holiday performance, backed by strong holiday initiatives, is expected to have contributed well to top-line growth. Notably, it witnessed record-breaking sales during Black Friday and Cyber Monday.

Amazon’s expanding distribution network, and Prime-enabled fast delivery and robust grocery services are expected to have aided the performance of its online retail business in the fourth quarter.

Prime Free One Day service, Amazon Fresh, and robust two-hour delivery service of natural and organic products such as meat and seafood, fresh produce, and staples from the Whole Foods Market are expected to have continued driving customer momentum in the quarter under review.

Its expanding Same-Day Delivery service, which allows Prime members to receive their orders within five hours, to more cities of the United States is anticipated to have been a major positive.

The company’s strengthening e-commerce business worldwide, along with the expanding global footprint of Prime, are expected to have contributed well.

Its aggressive stance on bolstering the physical presence is expected to have benefited the quarterly performance.

An expanding footprint of Amazon Fresh grocery stores, 4-star stores and Amazon Go outlets across the United States is anticipated to have contributed well to the company’s sales in the fourth quarter.

Amazon’s expanding fulfillment network is likely to have been another tailwind. In the quarter under review, it announced the opening of a robotics manufacturing facility in Westborough, MA.

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

Additionally, gains from the growing momentum across Amazon Music are expected to get reflected in the company’s fourth-quarter results.

In the to-be-reported quarter, Amazon Music made its music mixed in spatial audio available on multiple devices for Unlimited tier subscribers.

The launch of Amazon Music for Colombia and Chile is likely to have aided the subscription of Amazon Music Unlimited in both countries in the to-be-reported quarter.

AWS Portfolio Strength to Consider

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

Amazon unveiled a visual development environment — AWS Amplify Studio — which enables web application user interface creation with minimal coding.

The company introduced AWS Private 5G, which enables enterprises to deploy and scale their 5G mobile network seamlessly.

AWS announced a managed service called AWS IoT FleetWise, which helps collect and transfer data from millions of vehicles to the cloud in real-time cost-efficiently.

It announced AWS IoT TwinMaker, which helps in the quick creation of digital twins of devices, equipment and processes.

The company unveiled three Amazon Elastic Compute Cloud (Amazon EC2) instances, namely C7g, Trn1 and Im4gn/Is4gen/I4i.

It announced four storage services and capabilities — Amazon Simple Storage Service Glacier Instant Retrieval, Amazon FSx for OpenZFS, Amazon EBS Snapshots Archive and AWS Backup.

AWS introduced six capabilities for Amazon SageMaker, namely Canvas, Ground Truth Plus, Studio, Training Compiler, Inference Recommender and Serverless Inference.

We expect all these initiatives to have helped Amazon win customers in the quarter under review. This, in turn, is expected to have boosted AWS’s fourth-quarter revenues.

Smart Device Portfolio to Consider

Amazon’s robust Fire products family, portfolio of Echo smart speakers, Blink doorbells and eero products are expected to have contributed well to its fourth-quarter performance. Additionally, strengthening Alexa features are likely to have aided Amazon in delivering a better user experience, which, in turn, is expected to get reflected in the company’s fourth-quarter results.

However, the impacts of the accelerating coronavirus-led expenses are anticipated to get reflected in the upcoming results.

What Our Model Says

Our proven model conclusively predicts an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

It has an Earnings ESP of +16.28% and a Zacks Rank #3 at present.

Other Stocks to Consider

Here are some other stocks that you may consider, as our model shows that these too have the right combination of elements to beat on earnings this season.

Endava DAVA has an Earnings ESP of +0.85% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Endava is scheduled to release second-quarter fiscal 2022 results on Feb 16. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 59 cents per share, suggesting an increase of 55.26% from the prior-year reported figure.

Monolithic Power Systems MPWR has an Earnings ESP of +2.83% and a Zacks Rank #2 at present.

Monolithic Power Systems is set to report fourth-quarter 2021 results on Feb 10. The Zacks Consensus Estimate for MPWR’s earnings is pegged at $1.87 per share, which suggests an increase of 42.75% from the prior-year reported figure.

Analog Devices ADI has an Earnings ESP of +0.25% and a Zacks Rank #2 at present.

Analog Devices is scheduled to release first-quarter fiscal 2022 results on Feb 16. The Zacks Consensus Estimate for ADI’s earnings is pegged at $1.79 per share, which suggests an increase of 24.31% from the prior-year reported figure.

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