Amazon | Fundamental Analysis | Must Read...

Earlier this year, Amazon made the shocking statement that founder Jeff Bezos would step down as CEO starting in Q3 2021. According to Amazon's announcement, the post will be filled by Andy Jassy, who earlier managed the company's fast-growing cloud computing business.

Given that Bezos will have to live up to his class, the pressure is on. Next week, when the e-commerce giant reports its third-quarter results, investors will be able to see how well the company operated under Jassy's leadership during his debut quarter as CEO.

Ahead of Amazon's critical Q3 earnings update, here's a preview of the earnings report and a look at how attractive growth stocks could be in the run-up to that update.

When the e-commerce and cloud computing heavyweight presents its earnings report this Thursday, investors will be watching closely to see how well Amazon can match the performance of a year ago, when revenues rose sharply as many consumers around the world were forced to stay home.

In its second-quarter earnings statement, Amazon executives projected third-quarter revenues of $106 billion to $112 billion. That explicates to revenue increase of 10 percent to 16 percent, a significant slowdown from 27 percent growth in the previous quarter and 37 percent growth in the year-ago quarter.

Analysts seem mostly convinced that the midpoint of Amazon's forecast range was too conservative. On average, analysts are predicting that third-quarter revenues will be at the high end of the company's forecast range.

While the company's reported earnings growth rate is certainly worth checking out, the bigger question that probably worries many investors is whether the stock is a good buy today.

While it's difficult to say where the e-commerce giant's stock will move anytime soon or even after its third-quarter earnings report is released, investors can take a look at Amazon's stock valuation to see if it seems attractive relative to the e-commerce giant's long-term potential.

Despite the company's tremendous market cap of more than $1.7 trillion, a case can be made that the stock looks like a good buy at this level. Consider that Amazon's price-to-earnings ratio of about 60 is actually quite cheap, given the company's top-line performance and its firmly growing operating margins.

Thanks to strong revenue growth and rising operating margins, Amazon's business model exhibits significant operating leverage. This means that over the long term, earnings per share could grow faster than revenues. In fact, that's exactly what analysts expect. According to the analysts' consensus forecast, Amazon's earnings per share will grow at an average annualized rate of 37% over the next five years.

Given management's outlook for strong double-digit revenue growth in the third quarter - even if Amazon faces tough comparisons to last year - and the company's clear operating leverage, Amazon stock looks like a good long-term buy today.

No doubt, investors should keep a close eye on Amazon's revenue growth rate. If it slows faster than projected, it could mean that analysts (and investors) are overestimating the company's long-term potential.