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Key Predictions for Q3 Earnings Reports of AMZN and EXPE
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The third-quarter reporting cycle is currently underway, with a significant number of reports slated to be released this week.
According to the Earnings Preview, 84 S&P 500 members have already reported quarterly results as of Oct 19. Total earnings for these companies depict a 19.2% year-over-year increase on 8.4% higher revenues. Moreover, 82.1% of these companies have cruised ahead of earnings estimates, while 61.9% have surpassed top-line expectations.
The impressive start to the season indicates that the growth witnessed in the first half of 2018 is likely to continue in the quarter as well. In fact, overall earnings for the S&P 500 companies are expected to be up 19.2% on 8.4% revenue growth.
Tomorrow, two Internet-commerce stocks, namely Amazon.com, Inc. (AMZN - Free Report) and Expedia, Inc. (EXPE - Free Report) , are scheduled to announce third-quarter 2018 results. Let’s have a close look at the factors that will impact their results.
Predictions for Amazon
We expect Amazon’s earnings to be driven by Prime revenue expansion and its increasing footprint in the core retail sector. Notably, Amazon keeps the retail business very hard to beat on price, choice, and convenience, backed by a solid loyalty system in Prime and its FBA strategy.
The company has been expanding Prime internationally to strengthen its foothold in international markets and create a launch pad for other businesses. This could complement the company’s current expansion efforts such as investments in Southeast Asia.
Also, AWS continues to be a multi-billion-dollar business and is the cash cow for Amazon. This can be attributed to its expanding cloud services portfolio. It generates much higher margins than retail and is the key driver of Amazon’s profitability.
Not only this, Amazon’s voice assistant, Alexa is gaining traction in the market owing to its compatibility with numerous home automation and other devices. Further, the growing importance of virtual assistants across the world is leading to increasing proliferation of smart home devices.
However, earnings could be hurt by continuous heavy investments in fulfillment centers, TV shows and movies, AWS, acquisitions, India expansion, and what not. (Read: Prime & AWS Likely to Boost Amazon's Q3 Earnings)
We expect strength in Core OTA, Trivago and Homeway segments to drive Expedia’s results in the to-be-reported-quarter. Core OTA performance is expected to be driven by solid momentum in room night growth in all the company’s key regions. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $2.55 billion.
Trivago’s growth will continue to be driven primarily by strong volumes and solid monetization. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $312 million.
HomeAway is expected to witness robust growth as well, since HomeAway conversion rates are strong and have been increasing year over year. Consistent increase in stayed room night and property night is also expected to contribute to HomeAway’s growth. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $395 million. (Read: What's in the Cards for Expedia Group in Q3 Earnings?)
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. Zacks Rank #4 or 5 are best avoided, especially if they have a negative Earnings ESP.
Amazon carries a Zacks Rank #2 and its Earnings ESP is +6.56%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Expedia also has a favorable combination of a Zacks Rank #1 and an Earnings ESP of +3.73%, which increases the odds of an earnings beat. The company surpassed estimates in two of the trailing four quarters, with an average positive surprise of 16.18%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Image: Bigstock
Key Predictions for Q3 Earnings Reports of AMZN and EXPE
The third-quarter reporting cycle is currently underway, with a significant number of reports slated to be released this week.
According to the Earnings Preview, 84 S&P 500 members have already reported quarterly results as of Oct 19. Total earnings for these companies depict a 19.2% year-over-year increase on 8.4% higher revenues. Moreover, 82.1% of these companies have cruised ahead of earnings estimates, while 61.9% have surpassed top-line expectations.
The impressive start to the season indicates that the growth witnessed in the first half of 2018 is likely to continue in the quarter as well. In fact, overall earnings for the S&P 500 companies are expected to be up 19.2% on 8.4% revenue growth.
Tomorrow, two Internet-commerce stocks, namely Amazon.com, Inc. (AMZN - Free Report) and Expedia, Inc. (EXPE - Free Report) , are scheduled to announce third-quarter 2018 results. Let’s have a close look at the factors that will impact their results.
Predictions for Amazon
We expect Amazon’s earnings to be driven by Prime revenue expansion and its increasing footprint in the core retail sector. Notably, Amazon keeps the retail business very hard to beat on price, choice, and convenience, backed by a solid loyalty system in Prime and its FBA strategy.
The company has been expanding Prime internationally to strengthen its foothold in international markets and create a launch pad for other businesses. This could complement the company’s current expansion efforts such as investments in Southeast Asia.
Also, AWS continues to be a multi-billion-dollar business and is the cash cow for Amazon. This can be attributed to its expanding cloud services portfolio. It generates much higher margins than retail and is the key driver of Amazon’s profitability.
Not only this, Amazon’s voice assistant, Alexa is gaining traction in the market owing to its compatibility with numerous home automation and other devices. Further, the growing importance of virtual assistants across the world is leading to increasing proliferation of smart home devices.
However, earnings could be hurt by continuous heavy investments in fulfillment centers, TV shows and movies, AWS, acquisitions, India expansion, and what not. (Read: Prime & AWS Likely to Boost Amazon's Q3 Earnings)
Amazon.com, Inc. Price and EPS Surprise
Amazon.com, Inc. Price and EPS Surprise | Amazon.com, Inc. Quote
Predictions for Expedia
We expect strength in Core OTA, Trivago and Homeway segments to drive Expedia’s results in the to-be-reported-quarter. Core OTA performance is expected to be driven by solid momentum in room night growth in all the company’s key regions. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $2.55 billion.
Trivago’s growth will continue to be driven primarily by strong volumes and solid monetization. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $312 million.
HomeAway is expected to witness robust growth as well, since HomeAway conversion rates are strong and have been increasing year over year. Consistent increase in stayed room night and property night is also expected to contribute to HomeAway’s growth. The Zacks Consensus Estimate for this segment’s revenues is currently pegged at $395 million. (Read: What's in the Cards for Expedia Group in Q3 Earnings?)
Expedia, Inc. Price and EPS Surprise
Expedia, Inc. Price and EPS Surprise | Expedia, Inc. Quote
What Our Model Says
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. Zacks Rank #4 or 5 are best avoided, especially if they have a negative Earnings ESP.
Amazon carries a Zacks Rank #2 and its Earnings ESP is +6.56%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Expedia also has a favorable combination of a Zacks Rank #1 and an Earnings ESP of +3.73%, which increases the odds of an earnings beat. The company surpassed estimates in two of the trailing four quarters, with an average positive surprise of 16.18%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>