Meta & Amazon Earnings Loom: A Closer Look
Mega-cap technology dominates the reporting docket this week, whose reports will capture the spotlight for some time. Investors will be closely tuned into the releases as the market looks to extend its 2023 rally into year-end.
Positive results from the bunch would undoubtedly be bullish for the market, particularly if we hear uplifting commentary surrounding current business conditions. Regarding this week’s slate, Amazon AMZN and Meta Platforms META are scheduled to report, representing two of the ‘Big 7’.
But how do expectations stack up heading into their respective release? Let’s take a closer look at recent sentiment and a few key metrics as a light guide.
Meta Platforms
It’s been the 'year of efficiency' for Meta Platforms, with the company’s quarterly results in 2023 regularly bringing fireworks post-earnings. The company has exceeded the Zacks Consensus EPS Estimate by an average of nearly 20% across its last four releases.
Image Source: Zacks Investment Research
Analysts have been bullish for the upcoming release, with the $3.62 Zacks Consensus EPS Estimate up roughly 5% since the beginning of August. Top line revisions have also been positive, as the $33.4 billion quarterly revenue estimate has moved 1.2% higher during the same period.
Image Source: Zacks Investment Research
Many will be interested in the company’s Reality Labs performance, a segment that includes Meta’s augmented and virtual reality (AR/VR) related consumer hardware, software, and content. The segment has come under scrutiny in the past following concerns about its profitability.
Nonetheless, the Zacks Consensus Estimate for Reality Labs revenue stands at $315 million, suggesting growth of 10.5% from the year-ago period. The company stated in its latest release that it expects Reality Lab operating losses to increase into 2024 as it continues investing to scale its ecosystem.
The consensus expectation is that the Reality Labs segment will post a $4.1 billion operating loss in Q3, above the $3.7 billion mark in the prior quarter.
It’s worth noting that META shares aren’t overly expensive given the forecasted top and bottom line growth, with shares currently trading at a 23.5X forward earnings multiple (F1), in line with the five-year median.
Meta’s earnings are forecasted to climb 38% in its current year (FY23) on 14% higher sales.
Image Source: Zacks Investment Research
Amazon
Amazon’s quarterly results in 2023 have consistently exceeded expectations, beating the Zacks Consensus EPS Estimate by at least 40% across its last three releases and snapping a streak of negative surprises that started in 2022.
Currently, the Zacks Consensus EPS Estimate of $0.58 represents 190% growth from the year-ago quarter, with the estimate up a bullish 49% since the beginning of August. In addition, the $141.6 billion quarterly revenue estimate implies growth of 11.6%, being revised 2.5% higher during the same period.
Image Source: Zacks Investment Research
Similar to META, Amazon’s quarterly results in 2023 have been aided by a focus on efficiency. Throughout its latest quarter, operating income jumped to $7.7 billion from $3.3 billion in the year-ago period, and operating cash flow increased 74% to $61.8 billion.
In addition, it’s worth noting that Amazon hosted its biggest-ever Prime Day event earlier in July, with over 375 million items purchased and reflecting a strong consumer.
Regarding Amazon’s key metrics, Amazon Web Services (AWS) results are the common focus among investors. Regarding AWS expectations for the upcoming print, the Zacks Consensus Estimate for AWS Net Sales stands at $23.2 billion, 13% higher than the year-ago figure.
As shown below, the company has recently exceeded expectations for AWS Net Sales in back-to-back releases. It’s more than reasonable to assume Amazon will discuss AWS results heavily, particularly as investors seek further clarity surrounding enterprise demand.
Image Source: Zacks Investment Research
Bottom Line
Mega-cap technology dominates the reporting docket this week, with the likes of Meta Platforms META and Amazon AMZN scheduled to reveal quarterly results.
Both companies have enjoyed positive top and bottom line estimate revisions, with each also expected to post sizable growth relative to the same period last year.
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