The golden opportunity of the NASDAQ being at the same level it was a year ago while the earnings have declined? How come the market isn't exploding upward on what you say is good news?
Please do not feed the troll. Thank you.
Big Dog Investments wrote:Ghost of Igloi wrote:Only you would think literally destroying WS estimates is a bad thing. I feel sorry for your clients. They have undoubtedly missed some golden opportunities.
Yes, Amazon's web hosting business is driving it's revenue, and if you feel that justifies paying 280 times for Q2 the equivalent EPS fine. The margin on the balance of its business is quite small, however AMZN is driving plenty of companies out of business. You may wish to temper your enthusiasm so you don't get de-fanged again.
Ghost of Igloi wrote:
Considering that the FANG stocks were a major influence on the positive return of the S&P 500 for 2015, the glaring underperformance in 2016 is significant. Furthermore, Amazon and Netflix are two of the most overvalued stocks in the index. Facebook and Google are two of the largest market capitalization stocks in the index. Tracking the performance of these four stocks will say much for the direction of this market, which in the end will be the hurt locker for long only stock investors.
Ghost of Igloi wrote:
Let's compare the earnings and valuation of Ford and Amazon this quarter. Amazon earned $857 million or $1.78 for each $750.00 share and a PE of 189. Ford earned $1.9 billion or $0.49 for each $12.00 share and a PE of 6. Ford has a dividend yield of 4.7% while Amazon has none.
Amazon is a great company. But as an investment it trades at a ridiculous valuation. The growth in earnings have come from AWS (cloud web hosting). New entrants into this business may put pressure on margins going forward. Amazon's core business is a low margin high cost business. Amazon operating income on their core business was $702 million on $17.7 billion in sales. The AWS business had $2.9 billion in net sales and earned $718 billion. In every severe market correction or Bear Market stocks trading a extended multiples have fared poorly. I see no reason why the future will be any different.
Ford is also a great company that is conservatively managed. Ford did not need a bailout during the financial crisis. I have not delved into the financials of Ford or the other auto companies, but perhaps this quarter reflects this conservative approach. The growth in sub-prime auto loans is well known.
Auto sales are at record levels, and inventories of new and used cars have been growing. So the risk to Ford is more the cyclical nature of their business.