Kindle Fire Sales Expected to Boost Amazon (AMZN) Earnings
Today we get Amazon (Nasdaq: AMZN) fiscal 2011 results after the close. And with the Kindle Fire lighting up holiday stockings, this year analysts expect big guidance from management at Amazon.
Amazon.com is a difficult company to value. It is so dominant but Amazon's retail monopoly hasn't translated into net income. Consider that at $192, Amazon.com shares trade at nearly 150 times expected 2011 earnings of $1.18 per share. And that multiple can vary from quarter to quarter, too. Based on trailing EPS, Amazon trades with a 101 P/E multiple.
Even though AMZN trades at a hefty EPS multiple it has sales of $45 billion. With a market cap near $90 billion, AMZN shares trade with a P/S ratio of 2, which is below the P/S ratio of 3 from competitors such as eBay (Nasdaq: EBAY).
Investors like Amazon because of its open-ended growth story. But shares are down 6% from their last earnings report, which suggests the Street is losing that interest.
As we turn to the chart, AMZN has strong overhead resistance at $210. Shares will also have some pressure at the 200-day moving average, which hovers around $203.
To the downside, minor support exists near $174. If that price fails shares of AMZN are headed for a quick ride back to stronger support at $161. The whisper numbers say that Amazon.com will beat EPS estimates by a penny. But even though I like Amazon as a company, the stock looks poised to hit the red line of support.
