Three months ago, Amazon.com (NASDAQ:AMZN) painted a rosy picture of the upcoming holiday season:

"We're really looking forward to Q4," CFO Brian Olsavsky said on Amazon's third-quarter earnings call. "I think we're well-positioned to make it the best holiday ever for our customers."

The fourth-quarter report will arrive after the closing bell on Thursday. Is the e-commerce giant really poised to make history in this holiday-season earnings report?

How do the guidance targets stack up?

Three months ago, Amazon set up a loose guidance framework for the fourth quarter.

  • Net sales should land somewhere between $80 billion and $86.5 billion, reflecting year-over-year growth of 16% at the midpoint. This target assumes a 0.8% headwind from foreign exchange trends.
  • Operating profits could land anywhere between $1.2 billion and $2.9 billion. This guidance range compares to a $3.79 billion result in the year-ago period.

Earnings growth tends to follow fairly close to Amazon's operating profit trends, but the two metrics aren't exactly joined at the hip. Extrapolating bottom-line targets from the midpoint of the operating income guidance and the fourth-quarter figures from last year, I end up with an earnings range stretching from $1.91 to $4.62 per share.

For the record, the current analyst consensus points to earnings near $4.04 per share on approximately $85.9 billion of net sales. These projections sit far above the midpoints of Amazon's official or implied guidance but remain within the company's target ranges.

That being said, Amazon's fourth-quarter guidance was seen as a disappointment in October. The company has a history of exceeding its own targets, especially in the high-octane holiday seasons, but management certainly set a low bar for the upcoming report.

Several dozen dark blue Amazon Prime delivery trucks lined up in a large parking lot.

These trucks are making a difference. Image source: Amazon.

Business trends

Amazon has already provided some fresh data on its holiday sales. On Dec. 26, the company announced "record-breaking" holiday results. More than 5 million Amazon Prime memberships were started in a single week. The company's own shipping service quadrupled the delivery of next-day and same-day packages. The holiday update was strong enough to send Amazon's shares 4% higher that day.

The ultrafast shipping service is a drag on Amazon's bottom line for the moment, since the company is investing in a unique shipping system with 75,000 drivers. Year-over-year comparisons can be tough when you're adding this much infrastructure to the company's operating results. But Amazon is really investing for the long term here, providing unmatched shipping speeds as a great incentive for grabbing an Amazon Prime membership. Amazon is ripping a golden page out of the Costco (NASDAQ:COST) playbook, pairing a low-margin retail business with millions of paid memberships. Membership fees account for the bulk of Costco's bottom-line profits. Amazon isn't there yet, but that's a long-term goal for the e-commerce giant.

It's time to take action

So Amazon already spilled some of the beans on the holiday shopping season, and the company really did deliver "the best holiday ever" for its customers. The tea leaves also suggest that the customer-pleasing efforts should spill over into driving both revenues and profits higher. Investors should keep an eye on the one-day shipping program's costs and benefits, comparing the reported results more with the top end of management's guidance than with their midpoint brethren.

The stock has been having a relatively quiet year heading into this business update, trading just 12% higher over the last 52 weeks while the S&P 500 gained 25%. Make no mistake -- Amazon is still one of the best stocks on the market and you should consider picking up a few shares on the cheap before the fourth-quarter report drops.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.