Amazon's Earnings Beat: Everything You Need to Know

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Amazon  (AMZN) - Get Report beat revenue and earnings estimates handily and issued strong guidance relative to analyst estimates, helping restore the narrative that e-commerce and cloud tailwinds from the at-home environment are currently intact.

The stock ran up 21% into earnings since June 8, expanding the forward earnings multiple to 136 times. But the stock still rose 4.8% to $3,200 in post-market trading. 

Here were the results against Wall Street estimates: 

  • Revenue: $88.9B v. $81.4B (actual result: +40% year-over-year) 
  • Amazon Web Services: $10.8B v. $11.01B (+28%) 
  • Operating Margin: 6.5% v. 1.4% (Up year-over-year)
  • Adjusted EPS: $10.30 v. $5.70 adjusted (+97%)

The e-commerce business showed significant strength in the face of heightened demand for its service as consumers stay at home. Cloud revenue missed estimates, as did Microsoft’s  (MSFT) - Get Report, but still grew considerably. The company also acknowledged that it incurred $4 billion in health-related costs due to the pandemic and was still able to deliver its strong profit results. 

Amazon said, "This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe."

Management guided for third quarter revenue at a midpoint of $90 billion, better than analysts expected $86.4 billion. The actual guidance would represent about 30% growth. While the range of operating profit guidance is wide, the midpoint implies a margin of 3.8%, better than the expected 3.7% from analysts. Amazon sometimes invests heavily in order to shore up demand and snatch new customers and while it did so this quarter, the top line results were so strong, it turned a strong profit. And the guidance only makes investors more comfortable with the idea that the accelerated move into e-comemrce and cloud may be closer to sustainable than a one-time benefit. 

If the stock can close at $3,200 or above Friday, that would be a technical buy signal, said Ed Ponsi, TheStreet’s Founder of Ponsi Charts and Managing Director at Barchetta Capital. 

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