Earnings season is in full swing on Wall Street as stock giants including Apple Inc. (NASDAQ:AAPL), GoPro Inc (NASDAQ:GPRO), Amazon.com, Inc. (NASDAQ:AMZN), and Yahoo! Inc. (NASDAQ:YHOO) are all scheduled to post quarterly reports this week. Here is what investors should watch for.
Technology giant Apple will announce its third fiscal quarter 2015 earnings results on Tuesday, July 21 after market close. Wall Street expects Apple to post earnings of $1.80 per share and $49.26 billion in revenue, up from $1.28 earnings per share and $37.43 billion in revenue from the same quarter a year prior.
Investors should keep an eye on Apple’s iPhone sales as the company raked in nearly 70% of its revenue from the product in the previous quarter. Analysts believe Apple will post 49.4 million iPhone units sold in Q3, marking a 40.4% year-over-year increase. Investors should also look to see if Apple raised its average sales price for iPhones in the quarter as higher prices have a direct positive impact on profit margins.
Although analysts’ estimates for Apple look strong, the recent derailment of the Chinese economy could take a toll on iPhone sales in the country. Apple gets a large portion of its revenue from sales in China and may be adversely impacted as the Chinese stock market struggles to regain its footing. However, Apple became the number one smartphone vendor in China in Q1 2015, which could help apple maintain its momentum in the country and overcome any issues correlated to the falling market.
Apple is also expected to post sales numbers from the Apple Watch and Apple Music for the first time since both products were launched. While Apple Watch sales were booming at first, there has been recent speculation that sales of the Watch have significantly decreased, causing investor concern. However, revenue from both the Apple Watch and Apple Music is expected to be relatively small and will likely not make much of an impact.
Out of 37 analysts polled by TipRanks, 24 analysts are bullish on Apple, 2 are bearish, and 11 are neutral. On average, the all-analyst consensus for Apple is Moderate Buy.
Action camera company GoPro is also slated to announce second quarter 2015 earnings results on Tuesday, July 21 after market close. Analysts expect GoPro to post earnings of $0.26 a share and $395.22 million in revenue, down from $0.28 earnings per share but up from $244.60 million in revenue year-over-year.
GoPro has done considerably well this year, having beaten earnings estimates for three of the last four quarters. This comes as no surprise as GoPro made great strides recently and has been diligently working to transition from a ‘camera maker’ to a ‘content maker.’
GoPro launched a lower priced entry-level camera, HERO+ LCD, in early June, which enabled GoPro to increase its customer base and rake in more revenue.
In addition to its Hero action camera line, GoPro has also added a virtual reality recording system offered in a six camera or 16 camera form, as well as a quadcopter drone, which is set to launch in the first half of 2016. Additionally, GoPro has also been investing in software, media, sponsorship, and real-time live broadcast.
Although GoPro remains the clear action camera leader domestically, the company faces a lot of international competition, a factor that many investors find concerning.
Out of 16 analysts polled by TipRanks, 11 analysts are bullish on GoPro and 5 are neutral. On average, the all-analyst consensus for GoPro is Moderate Buy.
Amazon is set to announce its second quarter 2015 earnings results on Thursday, July 23 after market close. Amazon is expected to post a loss of ($0.14) per share and $22.37 billion in revenue, up from a loss of ($0.27) a share and $19.34 billion from the same quarter last year.
Amazon recently held its first ever “Prime Day” on July 15 in which the company offered more savings than those offered on Black Friday. Although the deals were exclusively offered to Prime subscribers, Amazon sold a total of 34.4 million items, 18% more than items sold on Black Friday. Although Prime Day sales won’t be reflected in Amazon’s Q2 report, there is a high probability that revenue estimates for the next quarter will have a decent increase.
Investors will be looking for an update on Amazon Web Services (AWS), Amazon’s cloud computing platform. AWS finally started turning a profit in April of this year with sales reaching $1.57 billion in Q1. AWS currently has over one million users is expected to make even bigger strides with new features like AWS Device Farm; a service that allows mobile app developers to securely test their apps on any smart device.
AWS together with Amazon Prime are expected to be the highlights of Amazon’s Q2 report and catalysts for gross margin expansion.
Out of 33 analysts polled by TipRanks, 24 analysts are Bullish on Amazon and 9 are neutral. On average, the all analyst consensus for Amazon is Moderate Buy.
Yahoo will announce its second quarter 2015 earnings results on Tuesday, July 21 after market close. Wall Street expects Yahoo to post earnings of $0.18 a share and $1.03 billion in revenue, falling from $0.37 earnings per share and $1.04 billion in revenue from the same quarter a year prior.
Yahoo has been planning to spin off its shares of Chinese e-commerce company Alibaba since January and expects the spin off to be completed by the fourth quarter of 2015. Investors were spooked away from Yahoo in May after speculation that the IRS was considering taxing company spinoffs, which are usually not taxed. These rumors were put to rest in late June, however, when Yahoo CEO Marissa Mayer sent a letter to shareholders explaining that the spinoff will “[maximize] value and tax-efficiency exclusively for Yahoo’s shareholders.”
With that said, investors may have reason to worry once again as Alibaba shares have been falling due to the crumbing Chinese economy.
On the other hand, Yahoo has been focusing on improving and boosting profits in its search business and recently announced a three-year partnership with Oracle to help them do so. Yahoo’s efforts in this area in addition to its search engine and advertising businesses are expected to show positive results in its Q2 report.
Out of 23 analysts polled by TipRanks, 17 are bullish on Yahoo and 6 are neutral. On average, the all-analyst consensus for Yahoo is Moderate Buy.