The Zacks Analyst Blog Highlights: Amazon.com, Twitter, eBay, Google and Dean Foods

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Aug 08, 2014, 09:30 ET

CHICAGO, Aug. 8, 2014 /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 the Amazon.com (Nasdaq:AMZN-Free Report), Twitter (NYSE:TWTR-Free Report), eBay (Nasdaq:EBAY-Free Report), Google (Nasdaq:GOOGL-Free Report) and Dean Foods Company (NYSE:DF-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

Amazon Expands Same-Day Delivery Service

Amazon.com (Nasdaq:AMZN-Free Report) has announced the expansion of its same-day delivery service to six cities. These include Baltimore, Dallas, Indianapolis, New York City, Philadelphia and Washington DC.

Amazon introduced this service in 2009 and recently expanded it to Dallas and San Francisco. The service allows customers to order items any day of the week, latest by noon, and receive the deliveries at their home on the same day. This service is applicable for millions of items including popular movies, video games, travel needs, school supplies and day-to-day household goods.

Prime members can avail the service for $5.99 which will cover all the items in a single order. However, the service is expensive for non-subscribers who need to pay $9.98 for the first item and 99 cents for each additional order.

This is the latest effort by the company to expand its operational activities (shopping) and increase delivery options. In May 2014, Amazon and Twitter (NYSE:TWTR-Free Report) sealed a deal to enable Twitter users to shop directly from Amazon's e-Commerce portal. In the same month, Amazon announced the expansion of its Sunday package delivery service to nearly 15 cities. In 2013, Amazon expanded its Prime Pantry, a grocery delivery service, to Los Angeles and San Francisco.

We believe the company's ever-expanding content portfolio will attract more subscribers, thereby expanding the company's revenue base.

Online shopping has changed the shopping scenario. Customers visit retail shops to physically check the products but they finally purchase it online to avail attractive discounts. Therefore, prompt and accurate delivery of products is essential for any company to succeed in the e-Commerce world.

With a view to make this expansion a success, Amazon has already started investing in warehouses.

However, the same-day delivery field is getting more crowded by the day. Increasing competition from eBay (Nasdaq:EBAY-Free Report), Google (Nasdaq:GOOGL-Free Report) and other online retailers remain a matter of concern. In June, Google expanded its same-day delivery service into rural areas to gain a competitive advantage. Also, uncertainty regarding its investment plans and the probability of continuing losses in the near term compels us to be cautious regarding the shares.

Amazon shares currently carry a Zacks Rank #4 (Sell).

Will High Milk Prices Hurt Dean Foods Again This Quarter?

Dean Foods Company (NYSE:DF-Free Report) is scheduled to report its second-quarter 2014 results on Aug 11. Last quarter, this global consumer products company posted a negative earnings surprise of approximately 350%. Let's see how things are shaping up for this announcement.

Factors Influencing the Upcoming Results

Dean Foods continues to suffer because of the high raw milk prices, which has been impacting the company's quarterly performance for quite some time now. The raw milk cost of Class I Mover registered a year-over-year increase of 22% in the last quarter and touched an all-time quarterly high of $22.38 per hundred-weight. The company has posted lower-than-expected earnings for the trailing four quarters. Further, it still expects high raw milk prices along with weak volumes in 2014.

Therefore, the company has lowered its earnings guidance for 2014 to 60 cents per share from the earlier projected range of 73–86 cents per share. Furthermore, Dean Foods expects to report adjusted loss in the range of 2–8 cents per share for the second-quarter of 2014. Agreeing with the company's projections for weak volumes and higher prices through the rest of 2014, we expect the company's results for the second quarter to be bleak.

Earnings Whispers?

Our proven model does not conclusively project Dean Foods as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:

Zacks ESP: ESP for Dean Foods is 0.00% since the Most Accurate estimate stands at a loss of 5 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks Rank #4 (Sell): Dean Foods' Zacks Rank #4 when combined with a zero ESP makes surprise prediction unlikely. Moreover, we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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