5 Stocks To Watch This Week: AAPL, CMG, TSLA, AMZN, TWTR
Tuesday, October 25
Wednesday, October 26
Thursday, October 27
Apple (AAPL)
Information Technology - Computers & Peripherals | Reports October 25, after the close.
The Estimize consensus is looking for earnings per share of $1.71, 5 cents higher than Wall Street and down 13% from the same period last year. That estimate has increased 1% since Apple’s most recent report. Revenue is anticipated to decrease 8% YoY to $47.2 billion. The stock typically moves up 5% in the 30-day post earnings period.
What to Watch:The iPhone continues to be Apple’s biggest catalyst, accounting for two thirds of its revenue in any given quarter. The phone has largely struggled in the past year due to the limited appeal of the iPhone 6s and increasing competition. However, the recent release and success of the iPhone 7 have put many of those concerns to rest. Sales of the phone have got off to an incredible started and now account for 43% of all iPhone sales recorded in the quarter. The phone was only available for the final two weeks of Q3, making this an even more remarkable feat.
Other products haven’t done as well, as the company tries to diversify away from the iPhone. Macs have been struggling, with sales declining 11% in the third quarter. Apple is prepared to unveil new macbooks later this week. iPad sales have also been in a downward spiral, with Apple only selling 9.9 million last quarter, compared to 10.3 million in the second quarter. Upgrade demand for these tablets have been abysmal, so it makes sense that the iPad 2 is still the most widely owned iPad to date. And according to a new IDC report, Apple Watch sales are hurting also, with sales plummeting 70% during the quarter.
Chipotle (CMG)
Consumer Discretionary - Hotels, Restaurants & Leisure | Reports October 25, after the close.
The Estimize consensus is looking for earnings of $1.66 per share on $1.094 billion in revenue, 3 cents higher than Wall Street on the bottom line and in-line on the top. Compared to a year earlier, earnings are expected to decline 62% with revenue decreasing 10%. EPS estimates have been pushed down by 13% since the last quarterly report, and revenue estimates have come down 4%. The stock has fallen 14% YTD.
What to Watch: Since CMG’s food safety scare nearly a year ago, the burrito chain has been on damage control in an attempt to rebuild its reputation. So far new campaigns have not been enough to aid in the recovery. In the second quarter, comparable restaurant sales decreased by 3.6%, on a 16.6% decline in total revenue. In an effort to regain customers, Chipotle has hit the ground running with new promotional campaigns and marketing initiatives. Some of these include Chiptopia which rewards customers for frequent visits throughout the summer. More recently, the company launched free kid’s meals on Sundays and complimentary beverages for students.
These new marketing initiatives are not only expected to be unsuccessful but have also come at the cost of profitability. The costs associated with running campaigns to drive sales typically put pressure on margins. Meanwhile, a broader pullback is beginning in the fast casual space with popular names like Shake Shack starting to show weakness. Any external pressures will only compound Chipotle’s losses, as they struggle to win back customers.
Tesla (TSLA)
Consumer Discretionary - Automobiles | Reports October 26, after the close.
The Estimize consensus is looking for earnings per share of -$0.04 on $2.235 billion in revenue, below Wall Street by 6 cents on the bottom-line, but above on revenues by $12M. Compared to a year earlier, this reflects a 96% increase in earnings and a 78% increase on sales. However, earnings and revenue estimates have decreased by 110% and 7%, respectively, since the last quarterly report. The stock is down 15% since the beginning of the year.
What to Watch: Heading into the report, Tesla announced record deliveries and production for the third quarter. Management indicated these record numbers could move higher in the fourth quarter, despite the ongoing challenges during winter months. Investors will be particularly interested in how these record numbers translate to the company’s financial report.
Tesla’s third quarter gains consisted of 24,500 deliveries, up 70% sequentially and over 100% on a year over year basis. Production during the quarter also rose to $25,185, reflecting a 27% increase from Q2 production of $18,345. In addition, about 5,500 vehicles were in transit to customers but not counted in the quarter. These will carry forward to delivery in the fourth quarter. Investors can expect to see production and delivery metrics increase as the company prepares to debut its newest car, the Model 3. The Model 3 will be Tesla’s cheapest car to introduce customers to electric cars and the Tesla family.
Amazon (AMZN)
Consumer Discretionary - Internet & Catalog Retail | Reports October 27, after the close.
The Estimize consensus calls for EPS of $1.00, 14 cents higher than Wall Street’s consensus. Meanwhile, revenue expectations of $32.77 billion are $217M above the sell-side consensus. Expectations have stayed relatively flat since last quarter, putting YoY growth expectations at 490% for EPS and 29% for sales. Shares of the online giant are up over 130% after hitting 52 week lows in February of this year.
What to watch: When Amazon reports on Thursday, many analysts believe that the 29% expected growth in total sales will be driven by double-digit growth in both the e-commerce and AWS divisions. E-commerce same store sales continually increased throughout the quarter, putting up 6.4% in July, 10.4% in August and 11.8% in September.
Amazon’s turn to profitability in the last quarter of 2015 was mostly driven by the success Amazon Web Services. This is what supports many popular websites including Netflix and has been the fastest growing part of the business. AWS has since slowed down slightly while other pieces start to hold their own. Amazon Prime and its hardware, Kindle and Echo, are becoming more widely adopted as efficient tools at modest price points. Meanwhile, new initiatives such as a courier service, fresh delivery and expansion in India will certainly help boost sales moving forward.
Twitter (TWTR)
Internet Technology - Internet Software & Services | Reports October 27, after the close.
The Estimize consensus is looking for earnings per share of $0.10, one cent above the sell-side consensus and 3% higher than the same period a year earlier. That estimate has decreased 12% since Twitter’s last quarterly report. Revenue is anticipated to increase 8% to $610 million. The stock is down 22% since the beginning of the year.
What to Watch: Twitter is in a bad way. After the stock received a bump earlier in the month due to acquisition rumors, shares ended up cratering two weeks ago when every potential suitor withdrew their bid.
Its widely believed that Twitter is overvalued at a $15B+ market cap given its dwindling user base and spotty financials. Monthly active users (MAUs) have been stagnant for several quarters now, only coming in at 313 million in the second quarter, a measly 1% increase QoQ and 3% YoY. The company is not even in the top 3 when it comes to DAU and MAU; Facebook, Instagram and Snapchat are all ahead of Twitter.
Twitter is trying to offset lagging user growth by capitalizing on the popularity of online video, a strategy already used by Facebook, You Tube, Instagram and others. Twitter is also actively trying to re engage its user base through strategic content partnerships, specifically with live streaming video. A contract with the NFL will stream every Thursday Night Football game on Twitter along with normal CBS/NBC programming. Its first few weeks this has been extremely successful in re-engaging and adding new users.
(Photo Credit: Kārlis Dambrāns)
Disclosure: None.
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