Amazon.com and OneWater Marine have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 9, 2023 – Zacks Equity Research shares Amazon.com, Inc. AMZN as the Bull of the Day and OneWater Marine Inc. ONEW as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BP plc BP, Murphy USA Inc. MUSA and Crestwood Equity Partners LP CEQP.
Here is a synopsis of all five stocks.
Bull of the Day:
Amazon.com, Inc. is finally back on the Zacks Rank #1 (Strong Buy) list. The e-commerce giant hasn't been a Strong Buy stock since 2019.
Amazon is an online retail giant, a technology company with AWS, Kindle, and Fire TV, a film studio with Amazon Studio and a publisher with Kindle Direct Publishing.
Focus is Back on Earnings
On Aug 3, 2023, Amazon reported its second quarter results and beat big on the Zacks Consensus reporting $0.63 versus the consensus of $0.34.T That's a beat of $0.29. It was the third big beat in a row.
Net sales were up 11% to $134.4 billion from $121.2 billion a year ago. All of its three key segments saw double digit sales growth.
North America segment sales jumped 11% from last year to $82.5 billion. International sales rose 10% year-over-year to $29.7 billion. AWS sales grew 12% year-over-year to $22.1 billion.
Free cash flow is back on track. It improved to an inflow of $7.9 billion for the trailing 12 months, compared with an outflow of $23.5 billion for the trailing 12 months ended June 30, 2022.
Lower costs helped drive the quarter. It's been a different Amazon with Andy Jassy at the helm. He just finished his second year as CEO. Even the earnings reports and conference calls are different with Jassy than they were with Jeff Bezos, who rarely even went on the calls by the end of his tenure.
Analysts Finally Bullish
Analysts have been bearish on Amazon for the last several years, even though it was a big winner during the pandemic. But analysts are now seeing an upside to the earnings again.
6 estimates were raised in the last week for 2023 and 2024. The 2023 Zacks Consensus has jumped to $1.88 from $1.55 during that time. That is earnings growth of 164.8% as Amazon only made $0.71 per share last year.
The 2024 Zacks Consensus is equally bullish, with analysts expecting another 39.4% growth with the Zacks Consensus jumping to $2.62 in the last 7 days.
Big Rally in Amazon Shares in 2023
Amazon, like the other big cap FAANG stocks, sold off last year but it has rallied big in 2023. Shares are up 66.5% year-to-date. However, they still have some work to do to wipe out last year's sell-off. There's no new all-time highs, yet, on Amazon. Shares are still down 16.3% over the 2 year period.
Is it cheap? Not on a P/E basis. It trades at 75.8x. But Amazon has never had a "low" P/E, not even in 2022 after the shares sold off.
It has a PEG ratio of just 2.2, however. That is not a "value" PEG level but it's low.
Analysts expect sales to grow 10.7% in 2023 and another 12.7% in 2024.
Amazon's #1 Rank is a sign that the earnings are turning around. For investors interested in the Magnificent 7 stocks, Amazon is one to keep on the short list.
[In full disclosure, Tracey owns shares of AMZN in her personal portfolio.]
Bear of the Day:
OneWater Marine Inc. is seeing the boat retail market normalize after the pandemic buying frenzy in the industry. But that means this Zacks Rank #5 (Strong Sell) recently slashed its full-year earnings guidance.
OneWater Marine is one of the largest premium marine retailers in the United States. It operates 100 retail locations, 11 distribution centers/warehouses and multiple online marketplaces in 20 states.
OneWater sells new and pre-owned boats, does financing and sells insurance products, parts and accessories as well as maintenance, repair and other services.
Big Miss in the Fiscal Third Quarter
On Aug 3, 2023, OneWater Marine reported fiscal third quarter results and missed on the Zacks Consensus Estimate by 42.3%. It reported $1.95 versus the Zacks Consensus of $3.38, for a miss of $1.43.
It has now missed 3 out of the last 4 quarters.
Despite the miss, revenue was up 4% to a new fiscal third quarter record of $594 million due to strong pre-owned boat sales and a 23% jump in service, parts and other revenue to $92 million.
However, dealership same-store-sales were flat year-over-year.
“In a deteriorating selling environment, our team did a great job driving a 4% increase in sales, maintaining flat dealership same-store sales and aggressively managing overall boat inventory," said Austin Singleton, CEO.
"The marine industry continues to transition back to historical norms and moderated pricing. However, the pace of this transition accelerated ahead of expectations, which pressured margins in the third quarter,” he added.
Like other retailers, high inventory has been a problem. As of June 30, 2023, total inventory increased to $572.9 million up from $269.4 million on June 30, 2022. This was due primarily to normalization of supply chain and acquisitions completed during the year.
Total inventory did decrease $20.4 million sequentially supported by OneWater Marine's focus to end the selling season with appropriate levels of inventory.
Big Cut to Full Year Earnings Guidance
OneWater Marine updated its prior guidance for the full fiscal year 2023. It now anticipated same-store-sales to be flat with earnings in the range of $4.45 to $4.70. That guidance range was well under the Zacks Consensus.
As a result, 3 estimates were lowered for fiscal 2023 since the earnings report. It has pushed the Zacks Consensus down to $4.58 from $7.28. That's an earnings decline of 49.8% as the company made $9.13 last year.
Analysts were also bearish on fiscal 2024 with 4 estimates cut for that year. Those revisions pushed the Fiscal 2024 Zacks Consensus Estimate down to $4.19 from $6.31 prior to the earnings report. That's a further earnings decline of 8.5%.
Shares Plunge on the Revised Guidance
Shares of OneWater Marine took a hit on the slashed guidance. They fell 27.8% over the last week and are now down 6.3% year-to-date.
OneWater is cheap, with a forward P/E of 5.9 but with earnings being revised lower, the stock could be a value trap.
Investors may want to wait for stabilization in the boat industry before jumping in. Be sure to watch for positive changes to OneWater Marine's earnings estimates going forward into fiscal 2024.
Additional content:
BP Aims to Buy 2 Wind Farms in the UK, Minus Government Subsidy
BP plc is contemplating the construction of two offshore wind farms close to Ireland without any government assistance, per The Times report. These would be the first of their kind in a sector where development has been hampered by rising costs, the report added.
According to BP's CEO Bernard Looney, work on the Morgan and Mona projects might begin toward the end of 2024. Per the report, the wind farms are located 20 miles off the coasts of north Wales and northwest England and have the capacity to power 3.4 million households.
BP stated that it might not participate in the U.K.'s contracts for different auctions because it would utilize the generated electricity for its own requirements as it anticipated an increase in energy consumption.
The Times reported that BP does not intend to apply for planning clearance for its projects until early 2024, a process that typically takes at least a year. As a result, wind farms in the U.K. have struggled to secure planning consent and connections to the national grid.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Some better-ranked stocks in the energy space are Murphy USA Inc. and Crestwood Equity Partners LP. While CVI sports a Zacks Rank #1 (Strong Buy), both MUSA and CEQP carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA serves 1.6 million customers daily and owns a dedicated line on the Colonial Pipeline. It operates stations near Walmart supercenters and is a low-cost, high-volume fuel seller. This enables the company to attract significantly more transactions than its peers.
Headquartered in Houston, TX, Crestwood is a master limited partnership that provides a wide range of fee-based infrastructure solutions in major U.S. shale plays like the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale and others. The company is least exposed to commodity price fluctuations since it generates stable fee-based revenues from diverse midstream energy assets via long-term contracts.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
BP p.l.c. (BP) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Crestwood Equity Partners LP (CEQP) : Free Stock Analysis Report
OneWater Marine Inc. (ONEW) : Free Stock Analysis Report
