The Zacks Analyst Blog Highlights: Amazon, Netflix, eBay, Groupon and Costco Wholesale
CHICAGO, April 26, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX), eBay (Nasdaq: EBAY), Groupon (Nasdaq: GRPN) and Costco Wholesale Corporation (Nasdaq: COST).
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Here are highlights from Thursday's Analyst Blog:
Amazon Mixed, Stock Still Climbs
After the bell Thursday, Amazon (Nasdaq: AMZN) reported mixed results for its Q1: an earnings beat on slightly lower revenues and downwardly revised guidance... and the stock is still up following the announcement.
Amazon, the world's biggest Internet retailer, posted earnings of 18 cents per share on quarterly revenues of $16.07 billion. This was a beat on the bottom line but a slight miss on the top for Amazon, whose stock continues to trade near all-time highs.
This, despite a low-end guidance range for operating income of -$340 million (far below Q212's $107 million), and a signal that International sales growth may be slowing. After-market traders paused a minute before buying more shares. But after climbing 2.2% at the close of regular trading, Amazon is up another 2.5% as of now.
The Zacks Consensus Estimate was for 10 cents per share, which marks the first time since Q1 2012 that Amazon has posted a positive earnings surprise. That said, EPS was nowhere near last year's 28 cents per share, though revenues were up 22% year over year.
Investors have grown accustomed to Amazon's ongoing long-term strategy of investing capital into expanding its businesses and using its synergies to venture elsewhere, and thus pay relatively less attention to the quarter-to-quarter numbers. This explains how a company like Amazon that hadn't posted an earnings beat in a year could still be trading at a dizzying price-to-earnings multiple north of 180x.
At first glance, Amazon looks to be taking on Netflix (Nasdaq: NFLX) here a bit, creating new TV content through Amazon Studios and its Prime Instant Video, expanding and updating licensing agreements for content elsewhere. Much the way Amazon used its vast resources to take on eBay (Nasdaq: EBAY) in online retail options and Groupon (Nasdaq: GRPN) in deals on goods and services, expanding entertainment content seems to be another area where CEO Jeff Bezos is saying, "Game on!"
Costco Reaches New High
Shares of Costco Wholesale Corporation (Nasdaq: COST) recorded a new 52-week high of $108.35 yesterday, before closing at $107.83, rising approximately 35.2% in a year's span. Based on the current price, Costco is 1.6% above the Zacks Consensus average analyst price target of $106.11.
Moreover, it currently trades at a forward P/E of 23.7x, a 41.9% premium to the peer group average of 16.7x. Additionally, the company's long-term estimated EPS growth rate is 13.2%, higher than the peer group average of 12.7%.
We believe Costco's differentiated product range enables it to provide an upscale shopping experience to its members, resulting in market share gains and higher sales per square foot. Moreover, it maintains a healthy membership renewal rate.
Costco remains committed to opening new clubs in domestic and international markets. The company's diversification strategy is a natural hedge against risks that may arise in specific markets.
This is evident from Costco's healthy comparable-store sales results, when most of the retailers were struggling against the challenging macroeconomic factors including higher taxes and a soft employment scenario along with unfavorable weather conditions that restrained consumers from spending.
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