Previewing Earnings for Amazon, Qualcomm, Facebook, Starbucks & Others

Indie Research

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 25- to 40-page Earnings Preview report for the week ahead each Friday.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Deckers Outdoor (DECK), Visa (NYSE:V), Qualcomm (QCOM), Facebook (FB), F5 Networks (FFIV), Starbucks (SBUX), and Amazon.com (AMZN).

Here is just a tiny sample of what BullMarket.com wrote about Starbucks:

Starbucks has surpassed analyst EPS estimates five of the past eight quarters, missing the consensus once and meeting it twice. During that time, the stock has risen the next day four of eight quarters. Seasonally, the stock has risen twice in the past four years.

Last quarter, Starbucks said net earnings rose to $390.4 million, or 51 cents per share, in the fiscal second quarter that ended on March 31st, up from $309.9 million, or 40 cents per share, a year earlier.

Excluding a 3 cent-per-share gain on the sale of its stake in a Mexican venture, earnings were 48 cents per share, matching analysts' average estimate, according to Thomson Reuters.

Revenue rose 11 percent to $3.56 billion. Analysts were expecting $3.59 billion.

Consolidated operating income grew 26% to $544 million in the second quarter. Consolidated operating margin expanded 180 basis points to 15.3%, the highest Q2 margin in the company's history. Leverage on strong sales coupled with 50 basis points of lower coffee cost drove the improvement, management said.

Sales on a same-store basis rose 6% worldwide. In the U.S.-dominated Americas region, which contributes about 75% of Starbucks' revenue, same- store sales also increased by 6% on increased traffic and spending per visit.

Analysts were expecting increases of 6.2 percent for the Americas and 6.1 percent overall for Starbucks' company-owned stores. ...

Outside of earnings, Starbucks has generally performed well and it has solid growth opportunities ahead via international expansion, especially in China, the rest of Asia and parts of Latin America. The extent of the growth potential in the U.S. is still quite surprising, with the acquisitions (tea retailer Teavana, La Boulange Bakery, and a small juice maker called Evolution Fresh) the company has made in recent months behind some of the growth.

All three should help expand the appeal of Starbucks if the integrations are well executed. None, we should note, were overly expensive for the company. Expanded food and beverage offerings should drive day-part expansion, which is a classic move from the QSR playbook, as is remodeling older stores.

A more favorable commodity cost environment bodes well for margins. The company's move into the consumer channel (K-Cups, Via instant coffee packs, and so on) is also a strategy we like given the strength of the Starbucks brand. K- Cups alone should add some nice growth and Verismo appears off to a solid start. We also like the recent move to tie grocery purchases to its overall rewards program. ...

The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

Just a few of the correct calls BullMarket.com made for Q2 so far were:

  • to expect a negative reaction to Google's (GOOG) results.
  • to expect a positive reaction to Apple's (KO) results.
  • to expect a negative reaction to NetFlix's (NFLX) results.
  • A daily investment service that is committed to creating long-term wealth for its members, BullMarket.com's Recommended List of stocks is up 104.9% from 2009-2012 versus a 57.9% return for the S&P, a 47.0% outperformance, topping the benchmark each year since the start of the Great Recession. Subscribers receive actionable market commentary, access to 40+ stock ideas on the Recommended List, and real-time trade alerts. Plus, sign up for a free trial today to view Bull Market's in-depth Special Reports - including its annual High Yield and MLP reports - and its timely Earnings Previews, which are published every Friday during the heart of earnings season. Get a Risk-Free Trial to Bull Market Today! (Please note returns are unaudited.)

    View Comments (0)