To say Amazon.com (NASDAQ: AMZN) is on a roll could be an understatement. Following a string of expectation-crushing quarters and a record-setting Prime Day earlier this month, shares are up a whopping 53% during the last 12 months, crushing the S&P 500's paltry 3% gain in the same period.
But can Amazon.com stock continue to live up to high expectations when it reports results on Thursday? Ahead of the company's second-quarter results, here's what investors should know.
Unsurprisingly, expectations are high going into Amazon's second quarter. This is the price of the company's very forward-looking valuation, which includes a price-to-sales ratio of 3.2 -- more than six times Wal-Mart's price-to-sales ratio of 0.5. On average, analysts expect Amazon to report non-GAAP EPS of $1.11, up hugely from $0.19 in the year-ago quarter, and up from $1.07 in Q1.
For Amazon's second-quarter revenue, the consensus analyst estimate is $29.6 billion, up about 28% from the company's year-ago quarterly revenue of $23.2 billion. It's worth noting that analysts' consensus estimate for Amazon's second-quarter revenue is about in line with Amazon's own guidance for the quarter; when Amazon reported its first-quarter results, management said it expected net sales between $28 billion and $30.5 billion.
Other key areas to watch
Beyond EPS and revenue, checking on these key metrics will help investors get a better picture of the health of Amazon's business.
AWS operating income: Interestingly, Amazon's biggest driver for profits in Q1 was not its e-commerce business. Amazon's most-profitable business was its Amazon Web Services, or AWS. AWS is a cloud-services platform, primarily making money from offering computing power and content delivery to other companies.
AWS is currently a major catalyst for Amazon's business. Operating income in the segment was $604 million in Q1, up from $194 million in the first quarter of 2015. Investors should look for AWS operating income to exceed $604 million in Q2, representing another quarter of significant year-over-year growth for the segment.
North America operating income: Trailing just behind AWS's contribution to Amazon's profits, Amazon's North America segment contributed $588 million in operating profits in Q1, up from $254 million in the first quarter of 2015. Investors should look for similar operating profits coming from this segment in Q2.
International operating loss: Another interesting area for investors to watch is the company's narrowing operating loss in its international segment. While Amazon expects to make money from the segment in the future, it's still in the red today. The international segment reported a $121 million loss in Q1, narrower than the $194 million loss in the year-ago quarter. Investors should look for losses in this segment to continue to improve.
Notably, if this segment can take a turn toward profitability in the future, this could significantly help the e-commerce giant's business, as the segment's revenue represents about a third of Amazon's total revenue.
Overall, investors should look for another quarter of significant year-over-year growth in revenue and EPS, as well as signs of more progress toward improving profitability. Amazon will release its second-quarter results after market close on Thursday, July 28.
Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.