Amazon (NASDAQ: AMZN) is slated to report its third-quarter 2021 results after the market close on Thursday, Oct. 28
The period to be reported is the e-commerce and technology giant’s first quarter with Andy Jassy as CEO.
Investors will probably be approaching Amazon’s report with cautious optimism. Last quarter, the company beat Wall Street’s earnings expectation but it missed the top line. Moreover, some investors were disappointed with management’s third-quarter revenue guidance.
That said, there seems to be a good reason for investors to be optimistic about Amazon’s sales. On Friday, the U.S. Census Bureau released U.S. retail sales numbers that were considerably stronger than expected. Last month, retail sales rose 0.7% from the prior month, whereas economists had been expecting a 0.3% decline. Moreover, the Census Bureau also revised upward its initial August retail sales growth from a 0.7% to a 0.9% increase from July.
While Amazon doesn’t guide earnings, it does so for operating income. Management expects Q3 operating income to range from $2.5 billion to $6 billion, compared with $6.2 billion in the year-ago period. This outlook assumes about $1 billion of costs related to COVID-19. This guidance range represents operating income declining by about 60% to 3% year over year.
The e-commerce leader is facing tough year-over-year comparables this quarter. The pandemic was raging in the third quarter of last year, a period in which vaccines were not available, so consumers were still heavily flocking to online shopping.
For context, in the second quarter, Amazon’s revenue jumped 27% year over year to $113.1 billion, missing the $115.1 billion the Street had expected, but coming in at the midpoint of its guidance of $110 billion to $116 billion. Revenue got a boost from Prime Day being held in the second quarter this year. By segment, sales in North America, internationally, and Amazon Web Services rose 22%, 36%, and 37%, respectively. Net income surged 50% to $7.8 billion, which translated to EPS increasing 47% to $15.12. That result easily surpassed the consensus estimate of $12.22.
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