, Inc. (AMZN) Is Trending: Know Before Betting

Amazon was featured on's most sought stock list. You may wish to investigate some of the important aspects that could affect the stock's performance soon. This online retailer's shares rose 11% last month, outperforming the Zacks S&P 500 composite's 5.2%. Amazon is part of the Zacks Internet-Commerce industry, which has gained 11.1%. The main question is: Where may the stock go next?

Despite media announcements or speculations regarding a company's business prospects 'trending' and causing an immediate price movement, fundamental facts always drive buy-and-hold decisions. We at Zacks monitor a company's earnings prediction shift above anything else. We believe the present value of its future profits stream determines a stock's fair value.

We base our analysis on how sell-side analysts covering the firm are changing their profit predictions to reflect business movements. Fair value for a company's shares rises with profit projections. When a stock's fair value is higher than its market price, investors buy it, raising its price. Because of this, empirical studies show a substantial link between earnings estimate revisions and short-term stock price changes.

Amazon is predicted to report $0.81 per share earnings, up +161.3% over the year-ago quarter. The Zacks Consensus Estimate rose 18.1% in 30 days. The current fiscal year consensus earnings forecast of $4.06 is up 40% year-over-year. This estimate has increased 10.8% in 30 days.

The consensus earnings projection for Amazon for the next fiscal year is $5.30, up 30.5% from last year. Over the previous month, the estimate has increased 10%. Even though earnings growth is the best sign of financial health, nothing happens if revenues don't rise. Earnings growth is nearly impossible without long-term revenue growth. Therefore, knowing a company's revenue growth potential is vital.

The consensus sales estimate for Amazon for the current quarter is $142.39 billion, a +11.8% year-over-year change. Current and next fiscal year estimates are $641.11 billion and $715.33 billion, representing 11.5% and 11.6% increases, respectively.

In the latest quarter, Amazon recorded $169.96 billion in revenues, up 13.9% year-over-year. EPS was $1.01 versus $0.21 a year earlier. Revenues were +2.23% higher than the Zacks Consensus Estimate of $166.26 billion. +24.69% EPS surprise. The company exceeded consensus EPS projections in all four quarters. Throughout this period, the company exceeded consensus revenue projections.

No investing decision is efficient without stock valuation. To anticipate a stock's future price, you must analyze if its present price reflects the business's fundamental value and growth potential.

Comparing the current value of a company's valuation multiples, such as its P/E, P/S, and P/CF, to its historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, while comparing it to its peers tells how reasonable its stock price is.

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