Analysts are expecting a drop in profit for Amazon.com (Nasdaq:AMZN) when it reports its results for the second quarter on Thursday, July 26, 2012. The company reported profit of 38 cents a year ago, but the current consensus estimate anticipates earnings per share of one cent.
Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: Can Earnings Guidance Accurately Predict The Future?
What to Expect: Analysts are projecting earnings of one cent per share for Amazon.com, 97.4% less than a year ago, when the company reported earnings of 38 cents per share.
While down from 20 cents three months ago, the consensus estimate has remained unchanged over the past 30 days. For the fiscal year, analysts are expecting earnings of $1.21 per share.
Revenue is expected to exceed last year's figure of $9.91 billion by 30% and come in at $12.89 billion for the quarter. The anticipated revenue for the fiscal year is $63.22 billion.
Company Performance: Over the past four quarters, Amazon.com has reported double-digit revenue growth. It has risen by an average of 40.8%, with the biggest increase of 51% coming in the second quarter of the last fiscal year.
The company has been profitable for the last eight quarters, but income has been falling for the last four by an average of 43.3% year-over-year.
There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Over the past quarter, the stock price has increased from $194.42 on April 25, 2012 to $228.29. Amazon.com's worst recent stretch was when its stock price fell $11.94 per share between May 10, 2012 and May 29, 2012.