Better-than-expected profitability is the main reason for Amazon’s stock boost
Amazon (AMZN) announced its 4Q14 earnings on January 29, 2015. Since that day, Amazon’s stock has continued to increase from $312 to the current price of around $384. This increase of about 23% in Amazon’s stock in the last month is due to a number of factors that made Amazon investors happy.
One of the biggest factors was the better-than-expected earnings per share (or EPS). Analysts had expected this number to come in around $0.17 per share, but Amazon exceeded expectations by producing EPS of $0.45 per share, as the chart below shows.
Amazon’s stock performance has beaten its peers easily
The company also managed to beat its own guidance on operating earnings. Amazon had expected its GAAP (generally accepted accounting principles) operating income to be anywhere between a $570 million loss and a $430 million gain. However, the company managed to produce an operating income of $591 million. This was a surprise, considering that Amazon had recorded an operating loss of $544 million in 3Q14.
This 23% increase in Amazon’s stock price is noteworthy—especially when you consider that the company’s peers eBay (EBAY) and Google’s (GOOG)(GOOGL) stock both gained only 1%, while Alibaba (BABA) stock has in fact declined by 16% during the last month. Even the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 Index, showed only a moderate increase of 2% in the last month.