Amazon.com, Inc. (AMZN) is slated to announce its fiscal 2023 fourth-quarter earnings on February 1. Analysts expect the company's revenue to increase 11.4% year-over-year to $166.26 billion. Likewise, its EPS is expected to rise significantly from the prior year’s period to $0.80.

The company is once again making headlines due to its mutual decision with iRobot Corporation (IRBT) to cancel its planned acquisition. The agreement would have enabled AMZN to foster ongoing innovation within IRBT, reflecting AMZN's strategic commitment to advancing technological progress and market dynamics.

Despite the setback in the acquisition deal, AMZN remains steadfast in its growth trajectory. On January 19, Amazon Web Services (AWS), an AMZN company, announced plans to invest ¥2.26 trillion ($15.29 billion) in expanding its cloud infrastructure in Tokyo and Osaka by 2027.

AWS' substantial investment will cater to rising demand and position the company to enhance its global dominance in cloud services further. By bolstering infrastructure in key Japanese markets, AMZN can tap into a lucrative sector that aligns with the evolving needs of businesses, ultimately contributing to sustained growth and financial success.

Furthermore, on December 20, 2023, AWS launched its second AWS infrastructure Region in Canada, specifically the AWS Canada West (Calgary) Region. The expansion will provide enhanced choices for hosting applications.

It will also position the company to capitalize on increased demand, driving financial growth through expanded services and access to advanced AWS technologies, including lucrative sectors such as data analytics, security, Machine Learning (ML), and Artificial Intelligence (AI).

Shares of AMZN have gained 20.6% over the past six months and 60.4% over the past year to close the last trading session at $161.26.

Here are the fundamental aspects of AMZN that could influence its performance in the near term:

Strong Financials

For the fiscal 2023 third quarter that ended September 30, 2023, AMZN’s total net sales increased 12.6% year-over-year to $143.08 billion. Its operating income rose 343.1% from the year-ago value to $11.19 billion. Also, the company’s net income and EPS grew 244% and 235.7% from the prior year’s quarter to $9.88 billion and $0.94, respectively.

Solid Historical Growth

Over the past three years, AMZN’s revenue and EBITDA increased at a CAGR of 16.8% and 19.2%, respectively. Its net income and EPS grew at respective CAGRs of 4.9% and 3.9%, respectively. In addition, the company’s total assets rose at a CAGR of 19.9% during the same time frame.

Optimistic Analyst Estimates

The consensus revenue estimate of $636.72 billion for the fiscal year ending December 2024 indicates an 11.5% year-over-year increase. Likewise, the consensus EPS estimate of $3.59 for the current year exhibits a 32.4% rise from the prior year. Moreover, the company topped the consensus revenue estimates in all four trailing quarters.

Robust Profitability

The stock’s trailing-12-month gross profit margin of 46.24% is 30.7% higher than the 35.38% industry average. Its trailing-12-month EBITDA margin of 13.35% is 22.5% higher than the 10.90% industry average. Moreover, the stock’s trailing-12-month CAPEX/Sales of 9.88% is 223.6% higher than the 3.05% industry average.

POWR Ratings Exhibit Bright Prospects

AMZN’s sound outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. AMZN has an A grade for Sentiment, aligning with optimistic estimates from analysts. Moreover, the stock has a B grade for Momentum. It is trading above its 50-day and 200-day moving averages of $150.20 and $132.78, respectively.

The stock is ranked #9 out of 52 stocks in the B-rated Internet industry. Click here to access AMZN’s Growth, Value, Stability, and Quality ratings.

Bottom Line

Despite the halted acquisition plans between AMZN and IRBT, the company remains resolute in its expansion initiatives. It is evident in AWS' considerable investment to expand cloud infrastructure in strategic markets. The recent launch of AWS Canada West Region further diversifies hosting options, strategically meeting the rising demand across various technology sectors.

Moreover, bolstered by AMZN's strong financial performance in the latest quarter, coupled with solid profitability and sustained momentum, loading up on AMZN shares seems wise.

How Does Amazon.com, Inc. (AMZN) Stack Up Against Its Peers?

While AMZN has an overall grade of B, equating to a Buy rating, you may check out these other A (Strong Buy) or B (Buy) rated stocks within the Internet industry: Alphabet Inc. (GOOGL), Meta Platforms, Inc. (META), and Yelp Inc. (YELP). To explore more Internet stocks, click here.

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AMZN shares were trading at $159.46 per share on Tuesday afternoon, down $1.80 (-1.12%). Year-to-date, AMZN has gained 4.95%, versus a 3.37% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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