Amazon (AMZN) to Report Q3 Earnings: What's in the Offing?

Amazon AMZN is scheduled to report third-quarter 2022 results on Oct 27.

For the third quarter, Amazon expects net sales between $125 billion and $130 billion. Net sales are expected to grow 13-17% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for net sales is pegged at $128.05 billion, indicating growth of 15.6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 24 cents per share, suggesting a decline of 22.6% from the year-ago quarter’s reported figure. The figure has moved up 4.3% over the past 30 days.

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 & Streaming Momentum to Note

Growing inflationary pressure on fuel, energy and transportation costs might have negatively impacted AMZN’s third-quarter performance.

A slowdown in online shopping activities, elevated staffing costs, foreign-currency headwinds and supply-chain disruptions are likely to have been a concern.

Nevertheless, Amazon’s strong performance during its mega shopping event Prime Day, conducted at the beginning of the third quarter, is likely to have driven its sales in the to-be-reported quarter.

Its robust distribution network, and Prime-enabled fast delivery and strengthening grocery services are expected to have aided the performance of its online retail business in the third quarter.

Prime benefits, including a strong loyalty system, customer-friendly offers, quick grocery delivery services, and 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.

AMZN’s aggressive stance on the core retail industry, especially grocery retail, is expected to have benefited the quarterly performance.

An expanding footprint of Amazon Fresh grocery stores across the United States is anticipated to have contributed well to AMZN’s grocery sales in the third quarter.

Amazon’s strengthening footprint in countries like India, Canada, the U.K. and Australia is expected to have bolstered its efforts in expanding its footprint in the global retail market.

This apart, strengthening relationships with third-party sellers on the back of strong solution offerings might have remained a positive. In the third quarter, Amazon rolled out a solution named Amazon Warehousing & Distribution for sellers to solve their supply-chain issues. It also introduced marketing solutions like advertising, social media ads and Buy with Prime marketing toolkits for sellers, especially direct-to-consumer merchants.

Coming to streaming services, a solid momentum across Prime Video is expected to have remained a major tailwind in the soon-to-be-reported quarter. Expanding original content, regional content and the overall content portfolio on Prime Video are expected to have driven the Prime subscription in the to-be-reported quarter.

Gains from the growing momentum across Amazon Music are expected to get reflected in the upcoming third-quarter results.

AWS Portfolio Momentum to Consider

Amazon’s expanding Amazon Web Services (AWS) portfolio is expected to have benefited the third-quarter performance.

In the third quarter, AWS announced the general availability of AWS IoT FleetWise, which aids in seamlessly collecting and transferring data from millions of vehicles to the cloud in real time with cost efficiency.

AWS made its managed wide area network (WAN) service, namely AWS Cloud WAN, generally available.

It also announced the general availability of three serverless analytics options for Amazon EMR, Amazon MSK and Amazon Redshift.

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

Smart Device Portfolio Strength

Amazon’s expanding tablet offerings with the introduction of the all-new Kindle and Kindle Kids, and Kindle Scribe might have contributed well.

AMZN’s expanding portfolio of Echo smart speakers might have been a positive for its third-quarter performance. Amazon unveiled next-generation Echo Dot and Echo Auto, Echo Dot Kids and Echo Studio in the third quarter.

Its strengthening portfolio of Fire devices is anticipated to have been beneficial. Amazon unveiled next-generation Fire TV Cube and the new Alexa Voice Remote Pro in the to-be-reported quarter.

AMZN’s expanding smart security camera offering with the introduction of the Blink Wired Floodlight Camera and the new Blink Mini Pan Tilt might have been a positive.

Strengthening Alexa features is likely to have aided Amazon in delivering a better user experience.

All these factors are expected to have aided AMZN’s quarterly performance.

What Our Model Says

Our proven model does not conclusively predict 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 is not the case here as you see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Amazon has an Earnings ESP of -27.66% and a Zacks Rank #4 (Sell) at present.

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this season.

Cognizant Technology Solutions CTSH has an Earnings ESP of +0.19% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cognizant is set to report third-quarter 2022 results on Nov 2. The Zacks Consensus Estimate for CTSH’s earnings is pegged at $1.17 per share, suggesting an increase of 10.4% from the prior-year quarter’s reported figure.

Benefitfocus BNFT has an Earnings ESP of +2.32% and a Zacks Rank of 3 at present.

Benefitfocus is scheduled to release third-quarter fiscal 2022 results on Nov 2. The Zacks Consensus Estimate for BNFT’s loss is pegged at 14 cents per share, which is narrower than the prior-year quarter’s reported loss of 19 cents.

CDW CDW has an Earnings ESP of +0.31% and is Zacks #3 Ranked at present.

CDW is expected to release third-quarter 2022 results on Nov 2. The Zacks Consensus Estimate for CDW’s earnings is pegged at $2.52 per share, suggesting an increase of 18.3% from the year-ago quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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