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 20- to 30-page Earnings Preview report for the week ahead each Friday.
Over the past year, BullMarket.com used the data it has collected to correctly predict investor reactions for approximately two-third of the stocks it's previewed.
In its latest earnings preview, BullMarket.com looks at several popular stocks, including Baidu (BIDU), Amazon.com (AMZN), Netflix (NFLX), Whole Foods (WFM), Caterpillar (CAT), Starbucks (SBUX), Facebook (FB), Deckers Outdoors (DECK), and Apple (AAPL).
Here is just a tiny sample of what BullMarket.com wrote about Amazon:
Amazon has beaten analyst EPS estimates five of the past eight quarters, missing the consensus the other three times. During that time, the stock has risen four of eight quarters. Seasonally, the stock has risen two of the last four years.
Last quarter, the Seattle-based Internet retailer reported net income of $130 million, or 28 cents a share, compared with $201 million, or 44 cents a share, in the same period a year ago. The results were better that Wall Street's expectation despite the decline.
Amazon's revenue rose 34% to $13.18 billion from $9.86 billion a year ago.
Analysts on average were expecting Amazon to report earnings of 7 cents a share and revenue of $12.9 billion for the quarter.
Although Amazon guided for sales of $12 billion to $13.4 billion in the quarter, it warned investors to expect a big decline in its operating profit for the quarter as it plowed money into businesses that it expects will pay off in the future, like its Kindle Fire device and distribution centers.
The company's operating income dropped to $192 million from $322 million last year. Amazon had guided for an operating loss of -$200 million to an operating profit of $100 million.
Media revenue increased to $4.71 billion, up 19%. Electronics and General Merchandise (EGM) revenue increased to $7.97 billion. Worldwide EGM increased to 60% of sales, up from 57%. ...
Outside of earnings, there is little to slow Amazon's top-line growth in our view; however, the company seems to be in a continual investment phase with only a few breathers here and there. The question for investors is whether the current spending spree will generate the payoff the company anticipates.
Amazon has gone through periods of investment before and come out with higher margins, but it's now a more mature company facing a wider fulfillment scope and its fastest-growing categories tend to be in lower-margin categories like health and beauty.
Amazon is trying to diversify its business model as well, with initiatives like cloud services and more focus on digital content with a streaming video service and the introduction of the Kindle Fire. The question once again is when will selling the Kindle devices at or below cost prove to be a margin and growth driver as content revenue supersedes device revenue.
The company could also start to lose the big tax advantage it has, as more and more states look to collect state taxes. California and New Jersey are the latest to start collecting taxes from the online retailer.
Amazon is one of those companies where its free cash flow greatly outstrips its earnings, with the 2013 EPS estimate at $2.57 but the FCF per share consensus at $6.98 and some estimates much higher. Even based on FCF, though, the stock still isn't exactly cheap, trading at about 31x FCF. ...
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 recent correct calls BullMarket.com made for Q2 were:
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