It looks like

Amazon

(AMZN) - Get Report

will keep showing progress in its core Tuesday, but investors may well be focusing on the margins.

The online retailer, which just a year ago was bleeding red ink amid a contentious debate over the health of its balance sheet, is likely to beat expectations and raise guidance when it reports second-quarter earnings Tuesday afternoon, analysts say. If the analysts are right, it would mark the third-straight strong quarter for the company as it moves toward consistent profitability, driven by gains in its books, music and videos business.

But like all publicly traded companies, Amazon is being held to a much higher standard nowadays. After trading in the stratosphere in the late-1990s Internet boom and plunging to earth as the bubble burst around 2000, Amazon has surprised investors recently with its solid growth and cost control. But whether the company can appease demanding investors amid the market's biggest selloff in years remains to be seen.

The Din

Amazon shares closed up only slightly Monday, despite the publication of some bullish research notes. The reaction came as another indication that even good news can be lost amid the din of accounting scandals and earnings quality issues. Just ask online auctioneer

eBay

(EBAY) - Get Report

: Last week it reported a solid quarter and raised guidance, yet

shares sold off anyway.

Amazon is expected to post a second-quarter loss of 6 cents a share on $790 million in revenue, according to Thomson Financial/First Call. But these numbers should be easily surpassed, mainly because of better margins from the company's electronics business, a boom in the sale of used merchandise and improvements in shipping and fulfillment expenses, says Safa Rashtchy of US Bancorp Piper Jaffray.

In a note published Monday, Rashtchy raised his revenue estimate to $807.5 million and improved his EPS estimate from a 6-cent loss to a 4-cent loss. He also expects Amazon to raise its guidance for the remainder of the year. The company has projected 15% year-over-year revenue growth, but through the second quarter, sales should be up about 22% from the previous year. "We would be buyers of Amazon before the Q2 earnings ... announcement," he writes.

Investors largely ignored that advice, however, and the stock added 21 cents to $15.50. Still, shares are up 39% on the year, spurred by the company's first-ever profit, which was announced in January.

If the predictions prove accurate, it will be the third-straight blowout quarter for Amazon, continuing its remarkable turnaround. Just last year, investors were fretting about the company's finances, with some predicting the company could face a costly vendor squeeze. After famously losing money for years, the Seattle-based company hit the black in the fourth quarter and followed up that performance with a solid first quarter.

Pressing

Still, there are a number of pressing issues for the company. For one, the company still does not have a chief financial officer. Warren Jenson, Amazon's former CFO, and the person widely lauded for engineering the first-ever profit, left earlier this year, and the company has not yet announced a replacement.

Second, Amazon is in the midst of a potentially costly price war with Buy.com, which announced in June that it would undercut Amazon by at least 10% on books and offer free shipping on top of that. Amazon has done its own bit of price-cutting: Earlier this year it announced free shipping for all orders of at least $99; it lowered that threshold to $49 in June. Earlier, Amazon lowered prices by 30% for most books over $15. Though the price war likely did not have any effect on second-quarter numbers, it could dent revenue going forward, some bears worry.

Thus, investors should key on the company's margins and look for any hint that they are suffering from the price cuts. Most analysts say margins should improve. Most notably, margins in the company's fast-growing electronics business, which loses money, should benefit from better distribution deals with manufacturers, analysts say.

The company has scheduled a conference call with the financial community at 5 p.m. EDT on Tuesday.