The Zacks Analyst Blog Highlights: Amazon.com, Wells Fargo, Citigroup, Bank of America and JPMorgan Chase
CHICAGO, Oct. 26, 2012 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.com, Inc. (Nasdaq: AMZN), Wells Fargo & Company (NYSE: WFC), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM).
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Here are highlights from Thursday's Analyst Blog:
Amazon Misses Big in Q3
You can add the world's largest online retailer to the long list of disappointing results for this earnings season. A few moments ago, Amazon.com, Inc. (Nasdaq: AMZN) reported a third-quarter loss per share and net sales that fell short of expectations.
Its guidance for the fourth quarter was nothing to write home about either.
The company lost 23 cents per share in the quarter, while the Zacks Consensus Estimate was expecting a loss of only 8 cents. This was its second consecutive quarterly loss. (This excludes a loss of 37 cents related to its involvement with LivingSocial. When included, the loss is 60 cents per share.) AMZN earned 14 cents in the year-ago quarter.
Net sales increased 27% to $13.81 billion, but that was slightly below the Zacks Consensus Estimate of $13.9 billion.
For the fourth quarter, AMZN expects net sales between $20.25 billion and $22.75 billion. The Zacks Consensus Estimate is at $22.8 billion.
At the time of its report, Amazon was a Zacks #2 Rank (Buy) with a few upward revisions from analysts in the past 30 days. That's likely to take a turn for the worse in the coming days.
The company has been investing heavily in improving its footprint around the world and finding new opportunities, hence its increase in the number of fulfillment centers. We respect its willingness to take on short-term challenges for long-term gains, but in the meantime we have a "Neutral" recommendation for the company.
Wells Fargo Ups Shares Buybacks
Ushering in good news for its shareholders, Wells Fargo & Company (NYSE: WFC) announced an increase in its share buyback authorization by 200 million shares.
Moreover, a quarterly common stock dividend of 22 cents per share, which is scheduled to be paid on December 1, 2012, to stockholders of record on November 9, 2012, has also been announced by Wells Fargo.
The boost in share buyback authorization by Wells Fargo, which has around 5.3 billion shares outstanding, is good news for shareholders. It comes amid an environment where peer companies such as Citigroup Inc. (NYSE: C) and Bank of America Corp. (NYSE: BAC) have steered clear of such increases in share buybacks while JPMorgan Chase & Co. (NYSE: JPM) suspended its temporarily following losses from credit derivatives.
Having posted profits for the past consecutive quarters, Wells Fargo's financial strength has been buoyed and it gave the company the confidence to propose a raise in dividend as well as boost the level of share buyback activity in 2012 compared to the prior year.
Wells Fargo got the nod from the Federal Reserve in March 2012 and as a matter of fact, the clearance of its capital plan in the stress test this year justified its solid capital position. It went ahead and boosted its shareholders' wealth by almost doubling its dividend. Consequently, the advancement in share buyback authorization further lifted shareholders' confidence in the stock.
Notably, Wells Fargo purchased 17 million shares of common stock in the third quarter. Moreover, it opted for an additional estimated 9 million shares through a forward repurchase transaction, which is expected to be settled in the fourth quarter of 2012.
Earlier in October, Wells Fargo reported its third quarter earnings results. The company achieved the eleventh consecutive quarter of growth in earnings per share by reporting earnings of 88 cents per share in third quarter 2012, beating the Zacks Consensus Estimate by a penny and comfortably surpassing earnings per share of 82 cents in the prior quarter and 72 cents in the year-ago quarter.
Results at Wells Fargo benefited from improvements in non-interest income as well as cost control measures. The company experienced decline in non-interest expenses reflecting positive operating leverage. It also reported $200 million in reserve release (pre-tax), attributable to improved portfolio performance.
We believe that investors should not be disappointed with their investments in Wells Fargo over the long term given its diverse geographic and business mix, which enables it to sustain consistent earnings growth. Strategic acquisitions will also help expand Wells Fargo's business and improve profitability. Capital deployment efforts are encouraging. Yet, tepid economic recovery, low interest rate environment and regulatory issues remain our concerns.
Wells Fargo currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering its fundamentals, we also have a long term Neutral recommendation on the stock.
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