Leigh Drogen

About the Author Leigh Drogen

Leigh Drogen is the Founder and CEO of Estimize. Estimize is an open financial estimates platform which facilitates the aggregation of fundamental estimates from independent, buy-side, and sell-side analysts, along with those of industry experts, private investors and students. By sourcing estimates from a diverse community of individuals, Estimize provides both a more accurate and more representative view of expectations compared to sell side only data. Leigh started his career as a quant trader at Geller Capital, a White Plains, NY based fund where he ran strategies that looked at earnings acceleration and analyst estimate revision models, as well as price momentum and several sentiment indicators. Leigh later went on to be the founder of Surfview Capital, a New York based asset management firm that used many of the same strategies as Geller Capital, with a focus on higher beta names on an intermediate term time frame. His educational background includes focus in economics and international relations, specifically war theory. He is a graduate with honors from Hunter College in New York City. You can contact Leigh by emailing him at Leigh@estimize.com

Don’t Get Caught Short These 3 Retailers Ahead of Earnings: Amazon.com, Inc. (AMZN), Wal-Mart Stores, Inc. (WMT), Costco Wholesale Corporation (COST)

Despite what it may seem, the retail sector and consumer spending has not exactly performed as media outlets have claimed. Internet retail has been the biggest growth catalyst in the sector, as more companies shift resources towards building out omni channel capabilities. With the new earnings season about to get underway, expectations are high for retailers. Earnings and revenue are forecasted to grow over 5% while some names will far exceed that number. As for major retailers like Amazon.com, Inc. (NASDAQ:AMZN), Wal-Mart Stores, Inc. (NYSE:WMT) and Costco Wholesale Corporation (NASDAQ:COST), the Estimize community is expecting mixed results. Amazon is on course for another great quarter, Costco should remain in mediocrity and Wal-Mart could see a loss. The stocks have followed these trends with Amazon up 65%, Costco up 14% and Wal-Mart down 2.4% in the past 12 months.

Amazon.com, Inc.

If any company has done a better job at garnering attention than Facebook, it’s Amazon. The Jeff Bezos led company has been pushed to the top of investor’s lists after it finally turned a profit in Q2 2015. Since then the stock is up nearly 70% while steadily making gains on the bottom line. Many experts now believe Amazon will become the first trillion dollar company and cross the $1000 per share threshold, a title previously believed to be Apple or Google’s.

Amazon’s turn to profitability has been largely driven by the success of Amazon Web Services. AWS is the preeminent leader in cloud space, hosting many of the world’s largest websites including Netflix, Expedia and Verizon Wireless. The company also continues to make headlines as Jeff Bezos opens up about his long term goals for the company. Amazon is already working on making Alexa recognize emotions and just invested north of $3 billion to begin operating in India. Not surprisingly, the Estimize community is high on Amazon heading into its second quarter results. Analysts on Estimize are looking for earnings per share of $1.18 on $29.72 billion, reflecting a 494% increase on the bottom line and 27% on the top.

Wal-Mart Stores, Inc.

Despite its recent misfortunes, WalMart is still the world’s largest retailer by a long stretch. Earnings have been mixed for quite some time as wage increases, currency headwinds, and fierce online competition have taken their toll. Wal-Mart has fended off some of these pressures by closing unprofitable stores, opening more super stores and devoting resources to expand its omni channel resources. Unsurprisingly, its online store continues to be its fastest growing division, but still only accounts for a small portion of revenue. Wal-Mart is also testing new technology such as drone delivery and Wal-Mart Pay to improve its in-store and online experience. One thing Wal-Mart has over Amazon is that it’s essentially a one stop shop for all of a consumer’s needs. Most stores now include a pharmacy, grocery store, gas station and everything a typical department store would sell. The Estimize community is still low on Wal-Mart this quarter, predicting the company will deliver unfavorable YoY comparisons. Analysts are looking for earnings per share of $1.02 on $119.58 billion in revenue, reflecting a 5% decline in profitability.

Costco Wholesale Corporation

Costco has been one of the few companies immune to Amazon’s wrath. The wholesale retailer makes a majority of its revenue from annual $55 membership fees. Last quarter, membership fees generated $618 million in revenue, a $35 million increase from a year prior. Costco earnings aren’t typically a secret come their report date. Each month the company discloses the past month’s sales numbers. For the four weeks ended May 29, Costco saw comparable store sales stay put as international markets struggled. Excluding negative impacts from gasoline prices and foreign exchange headwinds, that number jumps to 4%. The fourth quarter also features the official shift from American Express to Citigroup. Early indications are that the transition hasn’t had a material impact on retaining or acquiring members. The Estimize community is looking for earnings per share of $1.74 on $37.12 billion in revenue, 5% higher than a year earlier.

 

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  • Peter Cinelli

    Amazon has the highest prices on the web. Search Walmart, eBay, Best Buy, Home Depot, b&h photo, target red, etc before buying on Amazon. You find better pricing and since most vendors offer free shipping, why pay for prime.

    AWS faces competition from Ms Azure and Google. With $61 billion in debt liability, Amazon could have financial difficulties. Microsoft and Google are flush with debt free cash.