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33 minutes ago
- Business
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Why this analyst gives Amazon's earnings report a B+
Amazon (AMZN) beat on earnings and revenue for the second quarter, but the stock is slipping in after-hours trading. Wedbush Securities managing director of equity research Scott Devitt joins Market Domination to explain why Wall Street isn't wowed so far despite solid numbers. To watch more expert insights and analysis on the latest market action, check out more Market Domination. Amazon reporting a beat on earnings and revenue for the second quarter, while its key Amazon Web Services segment saw sales increase 17 and a half percent year over year. Here with a closer look is Wedbush Securities Managing Director of Equity Research, Scott Devitt. Scott, great to see you, sir, as always. So, Amazon reports, Scott, the just at least initial reaction in the after hours, Scott, we got the stock down about 4%. What do you make of the results? Uh they're good. I mean, I give it a B+. I'll tell you what's good and and then why the stock's probably down. The retail business overperformed healthily, advertising was very strong. Um, operating margin beat by 13%. And then AWS, 17 and a half percent growth is healthy, but because of the overperformance of Google's cloud business, and then Azure, you know, whispers were kind of creeping up towards 18, 19. So, it's not a miss relative to analyst expectations, but relative to buy-side expectations, you know, going into number, maybe that was a little bit light. And I think that's why we're seeing the response in the stock. So you think it's it's it's a compare and contrast story right now, Scott? They're just the bar got set high by Microsoft, by Alphabet. Yes, like being the cleanup hitter and and having the first three batters hit home runs in front of you. The bar, you know, the bar is rising, and then you have to do something even better. And in the case of Amazon, it was a good AWS quarter. But if all you're going to focus on is AWS, and you look at the prior reporters, most notably Microsoft and and Google, their results for the three-month period were better, you know, relative to expectations. And so, there's nothing wrong here, but that's it's just an expectations, you know, miss in that regard for a stock that has been relatively strong in recent weeks. Can I ask you in that big cloud fight, Scott, now that you've heard from all three, Microsoft, Alphabet, Amazon, what are Amazon's competitive advantages there? So, like Azure has, you know, uh a lot of affiliation with OpenAI, ChatGPT, which helps the revenue of the business. Amazon's tied to Anthropic, which is smaller but starting to grow and will be a more significant contributor in the second half. I think the moat that Amazon has, which is the question that you had, is that they are the legacy leader in providing the services. So, as they layer AI into their product portfolio, as they've done, their customer base gravitates towards that, and they continue to grow. But it's a it's a battle. There's three very good companies, you know, going after these cloud revenue. And um Amazon had it kind of all to itself for many years. And now, you know, Azure looks like the um, you know, the the prettier the prettier girl at the prom, if you will, at the moment. Let me ask you, Scott, about this other metric here. They they did project operating income in the current quarter. I I don't know if it fell short of your estimates. It does look like it did fall short of consensus. Um operating profit is going to be between 15 and a half to 20.5 billion. It looks like in the period ending in September. I'm just curious what you make of that data point, that metric, Scott. Is that is that perhaps worrying folks? Well, maybe they're turning on that spend spending spigot just a little too hard. It shouldn't. I mean, they um the capex year to date is 57 billion. So they're probably going to ultimately do more than the 105 billion for the year. But the reason why that guide is not an issue is that Amazon's been exceeding the high end of their guidance for many consecutive quarters. In fact, it guided to the second quarter of, I think it was 13 billion to 17 and a half billion, and just did 19.2. So when you look at that guide in respect to what it just did relative to its prior guide, you conclude that estimates are just fine. It's just the way that Amazon guides. They put a low hurdle out there to beat. So, if that's driving, you know, some of the underperformance after hours, that's a non-issue. Um where I think the core focus is to the extent that you're matching, you know, stock price performance to where actually there was disappointment, it had to be in that AWS number.
Yahoo
36 minutes ago
- Business
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Apple got a much-needed iPhone and China boost
Apple reported strong iPhone sales and rebound in revenue from China, giving a much-needed boost to two parts of the company's business that had struggled over the past year. That better-than-expected performance reassured Wall Street investors that key parts of its business are holding steady as Apple struggles to keep pace with rivals in the artificial intelligence race and navigates President Donald Trump's looming tariffs. The iPhone generated $44.5 billion in revenue for the quarter that ended in June, beating analyst expectations of $40 billion and last year's results of $39.3 billion for the same period. Overall revenue came in $94 billion in the quarter, marking a 10% increase year-over-year. Sales of iPhones also grew in China, where the company has underwhelmed recently, growing from $14.7 billion in the third quarter of 2024 to $15.3 billion this past quarter. Apple shares were up a little more than 2% in after-hours trading. But that's a much smaller boost than tech giants Microsoft and Meta, which saw there shares surge by nearly 7% and over 9% respectively on Wednesday thanks to their AI investments. Apple has woefully underperformed its rivals. The stock is down nearly 15% this year, missing out on the market's big rally over the past several months. Big quarter for the iPhone The iPhone generates more revenue than any other Apple product, making it the company's most important business in Wall Street's eyes. Apple CEO Tim Cook said on a call with analysts that the company set a June quarter record for iPhone sales, growing 13% year-over-year. But Trump's whipsaw tariff policies have required Apple and other tech giants to rethink how they manufacture and ship devices like smartphones and computers. Investors are also eager for Apple to make a bigger splash in artificial intelligence as other tech behemoths like Google, Meta and Microsoft push forward. Apple incurred approximately $800 million in expenses due to tariff-related costs, which is lower than the $900 million Apple CEO Tim Cook said the company was expecting in May. For the September quarter, assuming current tariff policies and rates remain the same, Apple expects that number to climb to $1.1 billion, Cook said on a call with analysts. Apple shifted most production of US-bound iPhones from China to India earlier this year to avoid Trump's tariffs. Smartphones were exempt from the previous reciprocal levies on China that would have increased the tariff rate to a staggering 145%, but Trump has also said companies like Apple and Samsung could face a 25% tariff unless they make their smartphones in the US. A temporary trade deal between the two powerhouse economies will keep tariffs at 30% until August 12, while Trump threatened India with tariffs as high as 25% earlier this week. AI struggles Beyond tariffs, Apple faces broader challenges to the future of its business. Apple is perceived to be behind in artificial intelligence, a critical technology that many believe will impact the economy and change the way people work, communicate and find information. The company indefinitely delayed a major upgrade to Siri that would have brought it up to speed with modern AI agents like OpenAI's ChatGPT and Google's Gemini. Cook said on the call with analysts that Apple was making 'good progress' with its upgraded Siri and that it plans to release the new version next year. In the meantime, Apple's suite of AI features includes functions spread across various features and apps – such as a custom emoji maker, the ability to summarize text and an image generator – tools that provide some convenience but are far from being as impactful as a service like ChatGPT. 'We are also significantly growing our investments,' Cook said during the call. 'Apple has always been about taking the most advanced technologies and making them easy to use and accessible for everyone. And that's at the heart of our AI strategy with Apple Intelligence.' Apple has also been losing key AI researchers to Meta in recent weeks as the social media giant aggressively expands its AI efforts, according to Bloomberg. Two analysts from Lightshed Partners made waves earlier this month when they questioned whether Apple should replace Cook with a more product-oriented CEO. 'He's a supply chain guy. They need a tech visionary,' Ted Mortonson, managing director and technology sector strategist at financial services company Baird, previously told CNN. 'I think they're in a lot more trouble than some people think.' Apple's lucrative services business – its second largest business behind the iPhone – is also under threat as regulators impose new rules that impact how Apple runs its App Store to address antitrust concerns.
Yahoo
an hour ago
- Business
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World Kinect: Q2 Earnings Snapshot
MIAMI (AP) — MIAMI (AP) — World Kinect Corporation (WKC) on Thursday reported a loss of $339.4 million in its second quarter. The Miami-based company said it had a loss of $6.06 per share. Earnings, adjusted for one-time gains and costs, were 59 cents per share. The results surpassed Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 48 cents per share. The company that services ships, jets and trucks posted revenue of $9.04 billion in the period. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on WKC at
Yahoo
an hour ago
- Business
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Floor And Decor's (NYSE:FND) Q2 Earnings Results: Revenue In Line With Expectations
Specialty flooring retailer Floor & Decor (NYSE:FND) met Wall Street's revenue expectations in Q2 CY2025, with sales up 7.1% year on year to $1.21 billion. The company's outlook for the full year was close to analysts' estimates with revenue guided to $4.71 billion at the midpoint. Its GAAP profit of $0.58 per share was in line with analysts' consensus estimates. Is now the time to buy Floor And Decor? Find out in our full research report. Floor And Decor (FND) Q2 CY2025 Highlights: Revenue: $1.21 billion vs analyst estimates of $1.21 billion (7.1% year-on-year growth, in line) EPS (GAAP): $0.58 vs analyst estimates of $0.57 (in line) Adjusted EBITDA: $150.2 million vs analyst estimates of $146.9 million (12.4% margin, 2.2% beat) The company dropped its revenue guidance for the full year to $4.71 billion at the midpoint from $4.73 billion, a 0.5% decrease EPS (GAAP) guidance for the full year is $1.88 at the midpoint, beating analyst estimates by 5% EBITDA guidance for the full year is $535 million at the midpoint, in line with analyst expectations Operating Margin: 6.7%, in line with the same quarter last year Free Cash Flow was -$9.99 million, down from $80.04 million in the same quarter last year Locations: 257 at quarter end, up from 230 in the same quarter last year Same-Store Sales were flat year on year (-9% in the same quarter last year) Market Capitalization: $8.43 billion Tom Taylor, Chief Executive Officer, stated, 'We are pleased to report that for the second quarter of fiscal 2025, our diluted earnings per share increased by 11.5% to $0.58, compared to $0.52 in the same period last year, reaching the high end of our expectations. Our second quarter comparable store sales increased by 0.4%, marking the first quarterly increase since the fourth quarter of fiscal 2022. We believe our second quarter earnings performance clearly reflects the disciplined execution of our agile growth strategies and the prudent management of expenses and profitability by our associates.' Company Overview Operating large, warehouse-style stores, Floor & Decor (NYSE:FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates. Revenue Growth Examining a company's long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. With $4.6 billion in revenue over the past 12 months, Floor And Decor is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores. As you can see below, Floor And Decor's sales grew at an impressive 16.2% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it opened new stores and expanded its reach. This quarter, Floor And Decor grew its revenue by 7.1% year on year, and its $1.21 billion of revenue was in line with Wall Street's estimates. Looking ahead, sell-side analysts expect revenue to grow 7.4% over the next 12 months, a deceleration versus the last six years. Despite the slowdown, this projection is healthy and indicates the market is forecasting success for its products. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Store Performance Number of Stores Floor And Decor operated 257 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 14.5% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time. When a retailer opens new stores, it usually means it's investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance. Same-Store Sales The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket). Floor And Decor's demand has been shrinking over the last two years as its same-store sales have averaged 6% annual declines. This performance is concerning - it shows Floor And Decor artificially boosts its revenue by building new stores. We'd like to see a company's same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base. In the latest quarter, Floor And Decor's year on year same-store sales were flat. This performance was a well-appreciated turnaround from its historical levels, showing the business is improving. Key Takeaways from Floor And Decor's Q2 Results It was encouraging to see Floor And Decor beat analysts' EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance slightly exceeded Wall Street's estimates. Zooming out, we think this was a decent quarter. The stock traded up 2.3% to $78.50 immediately after reporting. Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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an hour ago
- Business
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Reddit (NYSE:RDDT) Delivers Strong Q2 Numbers, Stock Jumps 13.3%
Online community and discussion platform Reddit (NYSE:RDDT) reported revenue ahead of Wall Street's expectations in Q2 CY2025, with sales up 77.7% year on year to $499.6 million. On top of that, next quarter's revenue guidance ($540 million at the midpoint) was surprisingly good and 14.2% above what analysts were expecting. Its GAAP profit of $0.45 per share was significantly above analysts' consensus estimates. Is now the time to buy Reddit? Find out in our full research report. Reddit (RDDT) Q2 CY2025 Highlights: Revenue: $499.6 million vs analyst estimates of $426.3 million (77.7% year-on-year growth, 17.2% beat) EPS (GAAP): $0.45 vs analyst estimates of $0.19 (significant beat) Adjusted EBITDA: $166.7 million vs analyst estimates of $129.3 million (33.4% margin, 29% beat) Revenue Guidance for Q3 CY2025 is $540 million at the midpoint, above analyst estimates of $472.7 million EBITDA guidance for Q3 CY2025 is $190 million at the midpoint, above analyst estimates of $160 million Operating Margin: 13.6%, up from -11% in the same quarter last year Free Cash Flow Margin: 22.2%, down from 32.3% in the previous quarter Domestic Daily Active Visitors: 50.3 million, up 4.8 million year on year Market Capitalization: $27.55 billion 'Reddit is built for this moment. In a world where connection is increasingly rare, our communities show how valuable human conversation and knowledge really are,' said Steve Huffman, Reddit Co-Founder and CEO. Company Overview Founded in 2005 by two University of Virginia roommates, Reddit (NYSE:RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes. Revenue Growth A company's long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Reddit grew its sales at an incredible 41.2% compounded annual growth rate. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis. This quarter, Reddit reported magnificent year-on-year revenue growth of 77.7%, and its $499.6 million of revenue beat Wall Street's estimates by 17.2%. Company management is currently guiding for a 55% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 24.9% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and implies the market sees success for its products and services. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Domestic Daily Active Visitors User Growth As a social network, Reddit generates revenue growth by increasing its user base and charging advertisers more for the ads each user is shown. Over the last two years, Reddit's domestic daily active visitors, a key performance metric for the company, increased by 33.7% annually to 50.3 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. In Q2, Reddit added 4.8 million domestic daily active visitors, leading to 10.5% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren't accelerating user growth just yet. Revenue Per User Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns from the ads shown to its users. ARPU can also be a proxy for how valuable advertisers find Reddit's audience and its ad-targeting capabilities. Reddit's ARPU fell over the last two years, averaging 1.7% annual declines. This isn't great, but the increase in domestic daily active visitors is more relevant for assessing long-term business potential. We'll monitor the situation closely; if Reddit tries boosting ARPU by taking a more aggressive approach to monetization, it's unclear whether users can continue growing at the current pace. This quarter, Reddit's ARPU clocked in at $7.87. It grew by 27.3% year on year, faster than its domestic daily active visitors. Key Takeaways from Reddit's Q2 Results We were impressed by Reddit's optimistic EBITDA guidance for next quarter, which blew past analysts' expectations. We were also excited its revenue and EBITDA outperformed Wall Street's estimates by a wide margin in the reported quarter. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 13.3% to $182.50 immediately following the results. Reddit may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free.
