The Zacks Analyst Blog Highlights: Apple, Amazon, Apple, Exxon and United Parcel Service
Apr 27, 2012, 09:30 ET
CHICAGO, April 27, 2012 /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 Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Exxon (NYSE: XOM) and United Parcel Service (NYSE: UPS).
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Here are highlights from Thursday's Analyst Blog:
Amazon Beats Big on Top & Bottom
For the second time this week, one of the world's biggest and most well known companies blew past quarterly expectations at a time when many were doubtful. On Tuesday it was Apple (Nasdaq: AAPL), and today it was Amazon (Nasdaq: AMZN), the world's largest online retailer.
AMZN announced earnings per share of 28 cents for the first quarter, compared to the Zacks Consensus Estimate at 7 cents. That accounts for a surprise of 300%!. Some analysts were expecting a loss in the quarter.
As anticipated, the result was far below the year-ago result of 44 cents. AMZN has proved that it isn't afraid to take short-term hits in order for long-term gains. The company's operating expenses have been moving higher as it expands into new markets. Specifically, the company has been increasing its fulfillment centers in Europe, China and the U.S. Such things have taken a toll on year-over-year earnings.
However, most of the market was more concerned with sales anyway, and AMZN didn't disappoint. Net sales jumped 34% to $13.18 billion, compared to $9.86 billion last year. Again, this was well above the Zacks Consensus Estimate, which was expecting about $12.88 billion. According to the company, the Kindle Fire remained "the #1 bestselling, most gifted, and most wished for product across the millions of items available on Amazon.com since launch."
Now we'll have to see if this report is enough to enhance the company Zacks Rank, which is currently a Zacks #3 Rank (Hold). The only way to do that is through upward earnings estimate revisions. There hasn't been much movement in that regard of late. Out of 29 total estimates for 2012, there have been three downward revisions in the past 30 days and none to the upside.
As a result, the Zacks Consensus Estimate for this year has moved down by a fractional 2 cents in the past month to $1.36 per share. The outlook for 2013 is down 9 cents in that time to $2.66 per share, which also suggests year-over-year improvement of more than 95%.
For the second quarter, AMZN forecasts net sales between $11.9 billion and $13.3 billion, or growth between 20% and 34%. It also expects another stiff year over year loss for profit.
In addition to concerns about its year-over-year profit, there's also some anxiety over the competition that AMZN faces. The iPad has already become a competitor to the Kindle, and there are other, smaller players. And don't forget the competition within online retail.
For now though, the market can take some solace in the fact that the consumer came out to support Amazon in the first quarter, which is good news for the company and the economy.
Jobless Claims Stalled, Earnings Mixed
This morning's earnings reports are not too bad if we realize that not every company can do what Apple (Nasdaq: AAPL) did the other day. That said, we do have a few uninspiring reports this morning from bellwether operators like Exxon (NYSE: XOM) and United Parcel Service (NYSE: UPS) that puts Apple's outperformance in its appropriate context. While we can't say that this morning's earnings reports are altogether disappointing, there is no other way of describing Jobless Claims reading.
The Jobless Claims data fails to satisfy the doubts raised by the recent run of underwhelming labor market reports, starting with the surprise March payroll miss. The official report says that Initial Jobless Claims dropped by 1000 to 388K, but in reality it is a 2000 increase, as the preceding week's tally was revised higher by 3000. The four-week average, which tends to smooth out the inherent week-to-week jumpiness of this series, increased by 6.2K to 381.8K last week.
It is unclear at this stage whether the emerging softness in labor market over the last few weeks is a reflection of economic improvement stalling or just due to complications in seasonally adjusting this data.
Bernanke has his own theory on the recent run of soft labor readings, which he explained again in his press conference Wednesday afternoon. He thinks that the pre-March strength may have been caused by a temporary catch-up in hiring to compensate for the over-reaction of employers during the downturn.
But irrespective of whether seasonal factors or something more fundamental is behind the recent run of weak labor market readings, it is raising doubts about the sustainability of the recovery. We will get a better read on the labor market in a week from Friday when we get the April non-farm payroll numbers.
We have a huge day on the earnings front today, with more than 60 companies from the S&P 500 coming out with results.
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