The Zacks Analyst Blog Highlights: J.C. Penney, Amazon, Verizon, Citigroup and Amgen
For Immediate Release
Chicago, IL – May 15, 2017 – 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 J.C. Penney (NYSE: JCP – Free Report ), Amazon (NASDAQ: AMZN – Free Report ), Verizon (NYSE: VZ – Free Report ), Citigroup (NYSE: C – Free Report ) and Amgen (NASDAQ: AMGN – Free Report ).
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Here are highlights from Friday’s Analyst Blog:
Weak Retail Earnings Reports to End Last Week
A combination of soft economic readings and some more weak earnings reports from traditional retailers are weighing on stocks today. The April Retail Sales and CPI readings this morning came in weaker than expected, though the prior-month’s Retail Sales growth pace did get revised higher.
The run of April data in recent days, the first set of numbers for the second quarter, is showing a rebound in the U.S. economy’s growth rate from the first quarter’s sub-par pace, but the extent of the growth rebound has been less than impressive. The Atlanta Fed’s real-time GDP estimate tracker currently pegs Q2 growth at +3.6% following this morning’s data, unchanged from before.
J.C. Penney (NYSE:JCP – Free Report ) became the latest retailer this morning to disappoint with same-store sale data, which follows similar underperformance from Nordstrom, Macy’s and Kohl’s on Thursday. These reports reconfirm what we all knew all along – that these operators needed literally to reinvent their businesses to effectively compete with the likes of Amazon. A number of these retailers are still very profitable and have strong balance sheets, which will keep them around for a long time. So, Macy’s and Nordstrom aren’t going away, at least not any time soon. But for them to become thriving and growing operations again, they will not only need to aggressively shrink their brick-and-mortar footprint, but also stock up with differentiated merchandize.
We provide the Q1 earnings season scorecard below, but please note that this daily publication features the best research output of the Zacks analyst team. In today’s write-up, we are featuring analyst reports on 16 major stocks, including reports on Amazon (NASDAQ: AMZN – Free Report ), Verizon (NYSE:VZ – Free Report ), Citigroup (NYSE:C – Free Report ) and Amgen (NASDAQ: AMGN – Free Report ). These reports have been hand-picked from amongst the 70 or so stock research reports published by our analyst team today. You can see all of today’s research reports here >>
Q1 Earnings Season Scorecard (as of Thursday, May 12th)
Including this morning’s releases, we now have Q1 reports from 454 S&P 500 members and another 18 index members on deck to report results next week. Total earnings for these index members are up +13.9% from the same period last year on +7.9% higher revenues, with 72.3% beating EPS estimates and 65.9% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 51.6%. As we have been saying all along, this better performance than we have seen from the same group of 454 index members in other recent periods.
For the Retail sector, we now have Q1 results from 24 of the 42 retailers in the S&P 500 index. Total earnings for these 24 retailers are up +2.2% from the same period last year on +4.6% higher revenues, with 58.3% beating EPS estimates and 54.2% beating revenue estimates.
Please note that we have a stand-alone Retail sector, unlike the official Standard & Poor’s placement of this space in the Consumer Discretionary sector. The Zacks Retail sector includes, besides the traditional department stores and other brick-and-mortar retailers, the online vendors like Amazon and Priceline and restaurant operators. Most of the 24 Zacks Retail sector companies that have reported Q1 results already at this stage are online vendors and restaurant players, with the traditional retail operators starting the reporting process with Thursday’s Macy’s disappointment that was maintained by Nordstrom after the market’s close on Thursday and JC Penney this morning.
The aggregate results from the 24 retailers that have reported Q1 results already are tracking below what we had seen from the same companies in other recent periods. This is despite the +41.1% growth in Amazon’s earnings on +22.6% higher revenues. On an ex-Amazon basis, the sector’s Q1 earnings growth would be modestly in the negative.
You can read more about our views about this earnings season in the weekly Earnings Trends report >>> Strong Earnings Season Winding Down
Today's Featured Stock Research Reports
Amazon ’s shares have outperformed the broader market in the year-to-date period (the stock is up +26.4% vs. the +7.2% gain for the S&P 500 as a whole). The company delivered strong first quarter results with both earnings and revenues beating expectations. The Zacks analyst likes the company’s solid loyalty system in Prime and its FBA strategy, and content addition continues to add selection to Prime memberships. Also, the AWS generates much higher margins than retail, so it has a very positive impact on Amazon’s profitability. Devices and IoT is also a potential growth area. However, Prime saturation in the U.S. market and competition in online retail remains concern. (You can read the full research report on Amazon here >>> )
Shares of Verizon have been laggards over the past year - the stock is down -9.6% over the past 12 months vs. AT&T's -1.8% decline and the +16.9% gain for the S&P 500 index. Verizon’s latest deal to acquire Straight Path Communications for $3.1 billion is part of its recent efforts to maintain its wireless leadership while branching out into adjacent opportunities. The company’s decision to launch FiOS Prepaid plan, FiOS Internet service and to zero-rate its data on FiOS Mobile App should help it gain subscribers while unlimited data plans have heated up the wireless industry. The Verizon-Yahoo deal underwent a discount revision of $350 million, but is part of the company's efforts to add content; a TV streaming service is reportedly being contemplated. In the updated research report issued today, the Zacks analyst discusses the pros & cons of investing in Verizon shares at this stage. (You can read the full research report on Verizon here >>> )
Citigroup shares have gained around +2.1% year to date, outperforming the Zacks Major Banks industry, which has gained +1.5% over the same period. The company’s first-quarter 2017 earnings outpaced expectations on higher revenues. The Zacks analyst likes the company’s restructuring and streamlining efforts, strategic investments in core business and expense management and believes these actions should support profitability going forward. Uncertainty about regulatory overhaul and interest rates are concerns in the Citigroup story, as they are for all other major banks. (You can read the full research report on Citigroup here >>> )
Amgen shares struggled last year, but came back strong following the election as fears of restrictive pricing and regulatory strictures eased. The stock has been down in a big way since March 1st, but has still done better than the peer group over the past year. The Zacks analyst points out that Amgen remains well positioned for growth with several blockbuster drugs in its portfolio. Amgen’s growth products – Prolia, Xgeva, Vectibix, Nplate and Sensipar – are all performing well. Amgen is also progressing with its pipeline including biosimilar drugs, given quite a few regulatory and data updates scheduled for the coming quarters. However, the company has some challenges in store given the presence of biosimilar competition and slowdown in sales of mature products. Volume growth of new products may not be enough to offset the lost sales due to the decline in mature brands. (You can read the full research report on Amgen here >>> )
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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.
Strong Stocks that Should Be in the News
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J.C. Penney Company, Inc. Holding Company (JCP): Free Stock Analysis Report
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Verizon Communications Inc. (VZ): Free Stock Analysis Report
Citigroup Inc. (C): Free Stock Analysis Report
Amgen Inc. (AMGN): Free Stock Analysis Report
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