The company operates through two geographical business segments: North America and international. It caters to three primary customer sets: consumer customers, seller customers and developer customers.

In the quarter ending March 2009 (Q1), Amazon reported earnings per share of $0.41 better than the analysts’ consensus estimate of $ 0.309 by $0.101 or 32.69%. The company was able to command good margins because suppliers were trying hard to move their own inventories. Amazon is also continuing to gain share in the e-commerce market at the expense of its rivals. Significant access to low-priced inventory due to liquidations (especially consumer electronics) contributed to a one-time gross margin bump.

Analysts’ estimates for the quarter ending June 2009 (Q2) range from a low of $0.18 to a high of $0.362, with a consensus of $0.315. For the quarter ending June 2009, the consensus EPS forecast has increased over the past week from $0.314 to $0.315 (0.32%) and decreased over the past month from $0.324 to $0.315 (-2.78%). Of the 27 analysts making quarterly forecasts, 2 raised and 3 lowered their forecast. 

Seasonally, Q2 is Amazon’s lowest quarter from a revenue perspective which means with that top line the company gets a little bit less leverage, particularly the fixed operating costs. Moreover, Q2-2008 was one of the best second quarter period ever for the company. So the base effect makes Q2-2009 look all the more weak.

Net sales are expected to be between $4.4 billion and $4.8 billion. This includes approximately 700 basis points of negative impact from foreign exchange. GAAP operating income is expected to be between $120 million and $200 million. Second quarter results will be driven by 1) strong third-party merchant business, 2) increasing e-commerce market share, 3) increasing contribution from the Kindle, 4) strong media results, 5) declining gross margins, and 6) unfavorable impact of foreign currency translation.

For the full-year ending December 2009, the consensus EPS forecast has increased over the past week from $1.635 to $1.636 (0.06%) and decreased over the past month from $1.642 to $1.636 (-0.37%). Of the 29 analysts making yearly forecasts, 3 raised and 3 lowered their forecast.

Since the beginning of the year, Amazon’s shares are up 67%. In 2008, AMZN’s shares fell 45% and underperformed the 34% decline in the Dow Jones industrial average. Currently shares are trading at $88.23 (41x consensus 2010 EPS estimates) compared with the 52 week range of $34.68-91.75. This is a rich premium to the relative valuations of their peer group. However, the company’s intrinsic worth is nearly 1.5 times the current trading price.

With improving economic prospects and increasing online purchasing trends, Amazon is expected to perform well and set a new 52 week high with in the remainder of 2009.