Amazon is set to report its fiscal Q1 2024 results on April 30, with expectations of surpassing consensus estimates for earnings and revenues based on past performance. Despite little change in stock price in recent years, Amazon has experienced volatile returns compared to the S&P 500, with underperformance in 2021 and 2022. The Trefis High Quality Portfolio, however, has consistently outperformed the index in the same period, suggesting a more stable investment option. With uncertainties in the macroeconomic environment, such as high oil prices and elevated interest rates, the question remains whether Amazon will continue to underperform or see a significant jump in the next year.
Amazon’s revenues grew by 12% year-over-year to $574.8 billion in FY2023, with all major categories showing growth. Online stores, physical stores, third-party seller services, subscription services, advertising services, and AWS all contributed to this growth. For fiscal 2024, Trefis forecasts Amazon’s revenues to reach $641.4 billion, with expectations for Q1 2024 net revenues to be around $143.6 billion, slightly above the consensus estimate of $142.5 billion. It is anticipated that Amazon will continue to see growth across all major categories in the upcoming quarter.
In terms of earnings per share, Amazon is expected to top consensus estimates for Q1 2024. Trefis analysis predicts adjusted earnings per share of $0.85, 2% higher than the consensus estimate of $0.83. The adjusted net income for Amazon increased significantly from -$2.7 billion to $30.4 billion in FY2023, primarily due to lower operating expenses as a percentage of revenues, higher revenues, and a significant jump in total non-operating income. The company is likely to report an annual GAAP EPS of $4.12 and revenue per share of $61.48 for the full-year 2024.
Based on Trefis estimates, Amazon’s valuation is projected to be $205 per share, which is 14% above the current market price of around $180. This valuation is calculated using a revenue per share estimate of $61.48 and a price-to-sales multiple of 3.3x for fiscal 2024. Despite the volatility in Amazon’s stock performance in recent years, the company’s strong growth prospects and expected outperformance of consensus estimates indicate a positive outlook for investors in the upcoming quarter.
In conclusion, Amazon’s upcoming fiscal Q1 2024 results are anticipated to exceed consensus estimates for both earnings and revenues. With a strong performance in FY2023 and expectations for continued growth in FY2024, the company is poised to deliver positive results in the current quarter. Despite previous fluctuations in stock performance, the Trefis High Quality Portfolio has consistently outperformed the S&P 500, highlighting the potential for stable returns. With a valuation 14% above the current market price, Amazon presents a promising investment opportunity for investors looking to capitalize on the company’s growth trajectory.
