For Immediate Release
Chicago, IL – January 31, 2013 – 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 ((AMZN - Free Report) ), Microsoft ((MSFT - Free Report) ), Sony ((SNE - Free Report) ), Apple ((AAPL - Free Report) ) and Coach, Inc. (COH - Free Report) .
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: https://at.zacks.com/?id=5513
Here are highlights from Wednesday’s Analyst Blog:
Amazon Gains from Holiday Spending
Amazon.com’s ((AMZN - Free Report) ) fourth quarter earnings of 21 cents missed the Zacks Consensus Estimate by 8 cents (27.6%). However, shares appreciated 8.9% in extended trading, more than making up for the 5.7% decline during the day, due to operating margin improvement for the first time in five quarters.
Amazon reported revenue of $21.3 billion, up 54.0% sequentially and 22.0% from the year-ago quarter. This was in line with the guidance for the quarter of $20.3-22.8 billion (up 55.7% sequentially, or up 23.3% year over year at the mid-point), although short of our expectations. Year-over-year revenue growth was 23% excluding unfavorable currency impact.
Around 57% of sales were generated in North America, representing a sequential increase of 54.4% and a year-over-year increase of 23.0%. The balance came from the International segment, which grew 53.5% sequentially and 20.8% year over year (23% excluding unfavorable currency impact).
Active customer accounts increased by 12 million to more than 188 million. Active seller accounts stayed above 2 million. Paid (third-party) units were 39% of total units in the third quarter, compared to 41% in the second quarter.
Key strategies for driving revenue growth remain a vast selection, competitive pricing, free shipping, user experience on Amazon properties and the Amazon Prime program. Fulfillment centers are also important, since they are essential for providing the level of customer service that Amazon customers have come to expect of the company. Over the past year, Amazon has been investing heavily in fulfillment and technology & content.
Amazon’s North America Media business was up 31.1% sequentially and 13.3% from last year to 14% of total revenue. The consumption of digital content across categories is helping the business. While selling and lending books on the Kindle platform continues, Amazon is also developing its direct publishing business.
In addition to Kindle ebooks, Amazon is going great guns with its video content. Prime Instant Video has the broadest reach, across Kindles, Microsoft’s ((MSFT - Free Report) ) Xbox 360, Sony’s ((SNE - Free Report) ) Playstation 3, Apple’s ((AAPL - Free Report) ) Mac or other PCs, as well as on TV.
Additionally, titles were expanded to 36,000 movies and TV episodes in the last quarter. Amazon’s reach and value proposition are making it a key player in the video distribution business. The category saw strong double-digit growth in four of the last five quarters.
The Electronics and General Merchandise (EGM) business in North America (40% revenue share) was up 68.0% sequentially and 23.6% from last year. EGM is a more seasonal business with holiday-driven spending having a significant impact.
This seasonality has increased manifold since Amazon launched the Kindle platform. Therefore, year-over-year comparisons are more meaningful. We see very strong double-digit growth in each quarter since December 2009, which is indicative of the expansion in the market and Amazon’s growing position within it.
Amazon’s International media business (17% of total revenue) was up 51.4% sequentially and 4.8% year over year. EGM, which was around 26% of total revenue, grew 55.3% sequentially and 34.7% from last year. This seems to indicate a greater preference for purchasing electronics rather than content in international locations.
Once the electronics business gains momentum and Amazon has enough fulfillment centers set up, we expect further investment in content. Amazon now has Kindle stores in Brazil, Canada, China and Japan where thousands of local language books are being sold. Therefore, new product categories, better selection within categories, competitive prices and free shipping remain drivers.
The Other segment, while still small (around 4% of total revenue, mostly in North America) includes Amazon Web Services (AWS). The North America business grew double-digits from both the previous and year-ago quarters. Growth in the international business was strong on a sequential basis, but not with respect to the comparable quarter of the prior year. During the year, AWS launched 159 new services and also reduced prices.
Coach Downgraded to Strong Sell
Zacks Investment Research downgraded Coach, Inc. (COH - Free Report) to a Zacks Rank #5 (Strong Sell) on Jan 29, 2013.
Why the Downgrade?
Coach witnessed a sharp downward revision in estimates after posting lower-than-expected second-quarter fiscal 2013 results on Jan 23, 2013.
The quarterly earnings of $1.23 per share fell short of the Zacks Consensus Estimate of $1.29 but rose from $1.18 earned in the prior-year quarter.
Management cited that the challenging macroeconomic conditions and intense promotional strategies undertaken by competitors in the women’s handbag category muted the company’s performance in North America. However, international results remained a bright spot in the quarter.
Coach said that net sales for the quarter came in at $1,503.8 million, up 4% from the year-ago quarter but came below the Zacks Consensus Estimate of $1,605 million. We also remain concerned about erratic consumer behavior and soft economic recovery.
The Zacks Consensus Estimates for the third and fourth quarters of fiscal 2013 dropped 3.5% and 4.2%, to 83 cents and 92 cents per share, respectively, over the past 7 days. Moreover, for fiscal 2013 and 2014, the Zacks Consensus Estimates fell by 2.6% and 4.7% to $3.78 and $4.24 per share, respectively, over the same time frame.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: https://at.zacks.com/?id=5515.
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 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. Subscribe to this free newsletter today: https://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which 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 at https://at.zacks.com/?id=5518.
Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339