By now, we all know Amazon.com, Inc (AMZN): the world's largest online retailer. Most of us shop online buying essential products, sometimes multiple times a week.
The company, now ingrained in our lives, has been all over the headlines recently. You've likely seen stories centered around its founder Jeff Bezos. He stepped down as CEO on Monday, July 5, exactly 27 years after founding the company. Day-to-day duties will go to Andy Jassy, but Bezos will remain as executive chairman. Bezos wants to focus more on philanthropy, climate change, and his own space company Blue Origins.
- Amazon is set to report quarterly earnings on July 28.
- The behemoth has crushed earnings estimates over the past four quarters.
- Earnings estimates for the upcoming report have been rising over the past few months.
With earnings for the fiscal quarter ending June 2021 fast approaching on July 28, investors likely want to know what to expect. Amazon stock is trading right at all-time highs; investors are likely asking themselves what's in store for Q3 earnings.
And this $1.88 trillion behemoth's share price has had a great year so far. Shares are up nearly 14.2% year to date, with a powerful 11% gain in the past month. As eyepopping as that is, will it continue?
I believe that there is more of that type of performance in store for Amazon in the coming months. I say that because Amazon has a strong history of beating revenue and earnings estimates. The way the stock has been trading recently also shows us reasons for optimism.
First, let's look at Amazon's earnings history over the past four quarters. Amazon tends to beat estimates by a mile. You can see that here:
For all four of the prior quarters, Amazon crushed estimates by double and triple digits.
So, what's the current trend of earnings estimates for this quarter? Estimates have been mostly rising over the past three months:
Let the trend be your friend, and Amazon has a long trend of shattering expectations. I expect more of that to come in the future.
In addition to looking at earnings, it's important to gauge how the stock is trading. Looking at how much the stock is being accumulated can help us paint a future possible picture for the stock's direction.
In the below chart, at the top I've notated when my proprietary system flagged buying in Amazon shares. And we can see the confirmation of that buying with the recent rise in the accumulation/distribution indicator:
When there's big-volume buying ahead of earnings, it's often a bullish indicator that investors want to be in position before an expected positive report.
The Bottom Line
Amazon has a strong history of beating analyst estimates for earnings. The current quarter's EPS trend has been rising with analysts over the past 90 days. Finally, big money seems to be gushing into the stock, propelling it to all-time highs.
Together, these are bullish signs that Amazon stock may see more upside in the coming weeks and months.
Disclosure: The author holds no position in AMZN at the time of publication.