(AOF) – Amazon (+6.89% to $199.24) is among the main gains in the S&P 500 index thanks to a high-quality quarterly publication. Not only did its results, particularly those of its cloud subsidiary, AWS, exceed expectations, but the outlook for Jeff Bezos' firm is also favorable. “Amazon’s overall operating margin of 11% is the company’s highest ever,” JPMorgan points out. The latter explains the company's good results by its international performance and that of AWS.
In the third quarter, the e-tailer and cloud specialist revealed net income up to $15.3 billion, or $1.43 per share, compared to a profit of $9.9 billion, or 94 cents per share, a year earlier. The consensus was just $1.14. Operating income rose from $11.2 billion to $17.4 billion in one year and far exceeded the consensus of $14.7 billion.
Amazon sales jumped 11% to $158.9 billion while Wall Street expected $157.20 billion.
“In a similar dynamic to its internet megacap peers, Amazon also controls headcount and therefore operating expense growth – while the overall year-over-year increase stands at 3 “%, this includes ongoing hires for orders and management revealed during the conference call that office headcount was actually down year-over-year,” notes UBS.
Its cloud computing activity (AWS) saw its operating profit increase by nearly 49.75% to $10.45 billion for revenues up 19% to $27.5 billion. The market expected a profit of $9.12 billion.
Operating profit objective better than expected
For the current quarter, operating income is expected between $16 billion and $20 billion compared to $13.2 billion a year earlier. The market targets $17.5 billion.
“Even though past performance is not an indicator of future performance, it is worth remembering that we have had seven consecutive quarters in which the upper limit of operating profit forecasts has been exceeded,” recalls UBS. “The previous quarter's disappointment of a median forecast 14% lower than the consensus today gives us a result exceeding the top of the forecast range by 16%.”
Amazon's net sales are expected to be between $181.5 billion and $188.5 billion, representing growth of between 7% and 11%. Wall Street is targeting revenue of $186.4 billion.
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