Amazon Stock Could Return 20% Annually Based on Analyst FCF Forecasts

$Amazon (AMZN.US)$ is likely to release its fourth-quarter (Q4) earnings report sometime before the end of this month. This is because it usually releases its quarterly earnings at the end of the month following the quarter-end.

More importantly, the release is likely to show a much higher free cash flow $First Commonwealth Financial (FCF.US)$ figure than it did last quarter. In Q3, Amazon reported that its last 12 months (LTM) FCF fell to just $2.6 billion. This was substantially lower than its year-earlier Q3 LTM figure of $29.5 billion.

By the way, $Amazon (AMZN.US)$ is one of the only large companies that reports its earnings this way. It likes to use a quarterly comparison of full-year FCF on a look-back basis over the prior 12 months.

This is most likely because the Christmas quarter (Q4) is such a large portion of its overall free cash flow. In other words, the quarterly changes are irrelevant, unless seen on an LTM basis, because the Christmas quarter is such an important factor.