Avago Technologies, Lithia Motors, Amazon.com and Netflix highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 23, 2014 /PRNewswire/ -- Zacks Equity Research highlights Avago Technologies (Nasdaq:AVGO-Free Report) as the Bull of the Day and Lithia Motors (NYSE:LAD-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onAmazon.com Inc. (Nasdaq:AMZN-Free Report) and Netflix (Nasdaq:NFLX-Free Report).
Here is a synopsis of all five stocks:
One of the industries that really helped push the S&P 500 into a correction this month was Semiconductors. On October 9, Microchip Technology warned and their CEO, Steve Sanghi, essentially "called the top" in the Semi cycle. Here's what he said...
"We believe that another industry correction has begun and that this correction will be seen more broadly across the industry in the near future."
This caused the SOX, the Philadelphia Semiconductor Index, to drop 8.8% in two days, especially after a Goldman Sachs chip analyst issued a report agreeing with Sanghi.
But a curious thing happened as the S&P 500 began its own deeper correction last week, falling over 4% in 3 days: the SOX stopped going down and didn't go any lower while the big cap index was dropping.
And this made more confident about my purchase of Avago Technologies (Nasdaq:AVGO-Free Report) when it was on sale in the $70s again, especially as other Semi analysts chimed in that Microchip's woes and insight were unique. And it doesn't hurt that Avago is making great, in-demand technology for Apple right now either.
Avago, a Singapore incorporated company with joint headquarters in San Jose, California, is a leading designer, developer, and supplier of a broad range of analog semiconductor devices and digital, mixed signal, and optoelectronics components and subsystems. These innovations are used in wide range of wireless, wireline, and industrial applications.
Lithia Motors (NYSE:LAD-Free Report) was a shining star of the automotive dealer group industry for the past three years. And just when car sales were breaking recovery records left and right this year, the stock -- and more importantly, its earnings momentum -- reached a peak.
One wonders if all the terrific sales numbers were also juiced in large part by ultra-cheap financing and special incentives.
On Monday October 13, Lithia warned that it is expecting its 2014 third quarter adjusted net income to be in the range of $34 million to $34.8 million, or $1.30 to $1.32 per diluted share, below its previous forecast of $1.36 to $1.38 per share.
This, of course, brought a wave of analyst earnings estimate revisions (EER). They took this year's consensus down from $5.05 to $4.86 and next year got clipped even more on a percentage basis from $6.40 to $5.90.
Additional content:
Can Amazon Surprise This Earnings Season?
Amazon.com Inc. (Nasdaq:AMZN-Free Report) is slated to report third-quarter 2014 results on Oct 23. In the last reported quarter, Amazon recorded a negative earnings surprise of 107.69%. Let's see how things are shaping up for this announcement.
Factors to Consider
Amazon reported a loss of 27 cents in the second quarter, greater than the Zacks Consensus Estimate of a loss of 13 cents. Amazon reported revenues of $19.34 billion, down 2% sequentially but up 23.2% from the year-ago quarter. This was within the guidance range of $18.1-19.8 billion (down 4% sequentially but up 20.7% year over year at the mid-point) and in line with our expectations.
Amazon continues to invest in growth areas. In its previous earnings call, Amazon's management disclosed plans for the third quarter- to add six new fulfillment centers and at least 15 new sortation centers. Sortation centers help Amazon to be closer to its customers so as to enable same-day delivery.
Amazons plans to invest about $100 million to acquire more video content in order to challenge Netflix's (Nasdaq:NFLX-Free Report) and YouTube's dominance in the video streaming market.
Amazon has also promised to invest $2 billion over the next few years in the Indian e-commerce market.
All these investments might affect Amazon's margins in the short term.
Earnings Whispers
One estimate for the soon-to-be-reported quarter was revised downward in the last 7 days while there were no upward revisions. The Zacks Consensus Estimate for the quarter declined from a loss of 73 cents to a loss of 74 cents over the same time frame. For the current year, one estimate moved south over the last one week, shrinking the Zacks Consensus Estimate to loss of 4 cents.
Furthermore, our proven model does not conclusively show that Amazon is likely to beat earnings this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, currently stands at +5.41%. This is because the Most Accurate estimate of a loss of 70 cents is higher than the Zacks Consensus Estimate of a loss of 74 cents.
Zacks Rank: Amazon currently holds a Zacks Rank #4 (Sell), which lowers the predictive power of ESP. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on AVGO - FREE
Get the full Report on LAD - FREE
Get the full Report on AMZN - FREE
Get the full Report on NFLX - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/avago-technologies-lithia-motors-amazoncom-and-netflix-highlighted-as-zacks-bull-and-bear-of-the-day-793430884.html
SOURCE Zacks Investment Research, Inc.
Share this article