How Amazon has fared against consensus estimates
Amazon (AMZN) had a strong run in 2015 and started 2016 with a bang. The company has exceeded consensus estimates in three out of the past four quarters. In fact, the company reported stellar 1Q16 results, crushing all estimates. It’s set report another strong quarter in 2Q16.
Amazon’s earnings surprise stems from its strong and consistent revenue growth and improvement in its margins. The company’s share price has risen by about 17% YTD (year-to-date), reflecting investors’ faith in the stock. Meanwhile, eBay (EBAY) and Alibaba (BABA) have generated YTD returns of about -4.9% and 6.6%, respectively.
Why analysts expect Amazon’s earnings to rise by 43.2%
Analysts expect Amazon’s earnings to rise at an average annual rate of 43.2% over the next five years. Amazon is the market leader in the e-commerce space and is likely to remain dominant, considering the success of its Prime membership and Marketplace initiatives.
The company’s e-commerce initiatives, including the expansion of its fresh food delivery service in the United Kingdom (EWU) and its increased investment in the Indian market, are likely to push its growth prospects.
Moreover, Amazon’s cloud business is growing at an astounding rate and is generating strong margins. Considering its impressive past results, strategic initiatives, strong fundamentals, healthy guidance, and the staggering growth of Amazon Web Services, Amazon is set to see another strong quarter.