Amazon is a customer-centric company that strives to make life easy and convenient for customers. Although well known as an online retailer and e-commerce site, Amazon’s other business units are increasingly driving the profitability of the company. We believe Amazon is on the cusp of an explosion of profitability that will drive the share price higher. Read
As we enter May, markets are in the midst of a stellar first quarter earnings season. The strength was likely anticipated given the 5% rally markets enjoyed in the first half of the month but confirmed our view that better than anticipated earnings would make the market appear less expensive than indicated by its 23x P/E multiple. Revenue and earnings per share are beating estimates by an average of 72% and 83%, respectively (hat tip to Morgan Stanley). The earnings beats are by a wider margin than usual, although this is a typical early cycle trend. For the third quarter in a row, mega-cap technology companies reported outstanding results. On average, the group beat revenue estimates by 8% and EPS estimates by 35%, demonstrating the operating leverage of internet-enabled businesses.
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