Mr. Sensitive

July 26, 2013

FSX Friday Update

Filed under: Uncategorized — lbej @ 17:05

This was the biggest earnings week of the quarter, with a slew of highly-anticipated reports following the market close each day.  No doubt you all were glued to CNBC between 4:00 and 6:00 every evening—as I was—so I’ll spare you the details.  All eyes were on Apple…until they were on Facebook, and then on Amazon.  Apple results weren’t as bad as they could have been—bearing in mind that EPS estimates for this quarter had come down from $12 a year ago to $7 before the report—and the stock climbed 5% as a result.  Amazon reported a 2-cent loss when the Street was expecting a 5-cent profit, but AMZN trades on insanity and not on earnings, and insanity has been on a tear lately, so naturally the stock rose two percent to an all-time high above $311.  If the company had met earnings expectations—and it bears repeating that they missed—a $0.05 quarterly earnings run rate would result in a P/E ratio of 1,500.  That sounds bananas if you don’t know anything about stock valuation, but for reference, the S&P 500 P/E is around 18, Google’s is 25, and Apple’s is 10.  But that’s okay because Amazon’s earnings are growing, right?  Well…not so much.  Again, Google is instructive.  Here are GOOG’s quarterly EPS for Q2 going back four years:

2013: $9.54

2012: $8.42

2011: $7.68

2010: $5.71

Not too shabby, eh?  Now here’s AMZN’s comparable EPS results:

2013: -$0.02

2012: $0.01

2011: $0.41

2010: $0.44

Every year is worse!

During that time, Google’s stock has risen 80% from $500 to $900—again, not too shabby.  But Amazon, over the same period, has seen its stock climb from $100 to $300—it tripled!  One day this madness will end.  I don’t know when, and I don’t know what the trigger will be, but when it does end—look out.  If Amazon’s technical momentum cracks, there is no valuation support whatsoever underneath it.  Yikes.

Facebook isn’t cheap either; if I apply the same earnings run-rate method to FB’s latest quarter, it results in a P/E of 45.  In effect, that suggests that Facebook’s growth prospects are nearly twice as strong as Google’s, which I think is preposterous.  But unlike Amazon, Facebook delivered a blowout quarter, crushing estimates on the top and bottom lines and reporting truly phenomenal growth in mobile ad revenue.  It was a fantastic quarter, and bears were caught completely flat-footed.  The stock leapt 30% on the week, and critics of the company’s leadership (myself included) were served a big plate of crow.  So does this mean that the Facebook IPO last year wasn’t the all-time debacle we thought?  Nope.  In fact, it confirms that Facebook’s IPO was the most egregiously mispriced stock offering since the dot-com bubble burst.  FB came public at $38 a share; after a 30% surge this week, the stock trades at…$34.  Facebook may be a great company—the jury’s still out—but the IPO was as awful as they come.

The Family Stock Index was all-but unch this week.  If the FSX doesn’t want me to talk about it…you know what?—that’s fine.  Keep your unch, FSX, and don’t make me tell you where you can stick it.

Advancers

  • Jenny (JNY) +10%.  Jenny turned 12 last week, and as all the relatives she’s visiting this week are learning, she looks at least two years older than she is.  Happily, Jenny also watched the premiere of Teen Beach Movie this week, and she discovered she’s not too old yet to enjoy a crappy Disney Channel musical.  I never thought that would be a reassuring thought for me, but life is full of surprises.
  • Ruby (RJET) +5.9%.  Ruby reported Q2 results this week, beating on the bottom line while missing on revenues.  Cost-cutting can only propel a stock for so long; eventually Brinky comes to visit and breaks everything you have and then expense control is pretty much out the window.
  • Katie (CATY) +3.5%.  The garden we planted behind the pond is going like gangbusters, with zucchini and cantaloupe and tomatoes all over the place.  It turns out Katie’s got a green thumb, which is probably the most surprising thing I’ve learned about her in at least fifteen years.  Alas, if my thumbs are ever any color other than my natural pink, they’re brown.  If you could see how many packs of raisins Brinky’s eaten this week alone, you’d understand why that is.
  • Nicole M. (COLM) +2.8%.  I’m sure Nicole and Mario would’ve liked to have more time with Jenny and Reagan this week than their Philly stopover permitted, and yet…the abbreviated visit also limited the potential for Teen Beach Movie contamination.  In contrast, poor Charlotte (ICE -1.1%) was trapped in the car with Jenny and her iPod for more than 10 hours; there’s more than a little relief baked into this move in COLM.

Decliners

  • Nicole E. (NICE -3.3%) and Reagan (REGN -2.1%.).  There was a secret plan in place whereby Reagan would hide the Brinky Bowl in a Pillow Pet and deliver it to Nicole during this week’s New York trip.  Alas, Reagan talks in her sleep.  But if it makes Nicole feel any better, I doubt I have much longer to enjoy the Brinky Bowl.  I expect Brinky himself to break the eponymous Bowl any day now.
  • Brinkley (BCO) -3.2%.  Oh, he’s going to suffer for this week.  He’s going to pay.  When Katie and I die—at age 100, in battle with Russian werewolves—and our will is read, then he’ll see what his interminable high-pitched squealing, fit-pitching, and world-breaking has wrought.  Jenny will get half the gold and jewels, Reagan will get half the gold and jewels, and Brinkley will get a bill for unpaid services rendered.
  • Jodi Ann (JOY) -2.8%.  Oh, she’s going to suffer for the (in all probability) giant baby Marcus put in her.  The finish line is still months away, and stretch run is the swollenest.  That’s a metaphor, of course—stretch run—except for the ‘stretch’ part.   I don’t advise running during the stretch run unless you want to end up in the emergency room because an uncontrollable boob flew up and broke your nose.
  • Lee (TGI) -9.2%.  Part 1/Book 1 of the Drawing Wolves dilogy/trilogy goes to my siblings on August 1, and I’m limping and shuffling to the finish line.  No, that’s not true—limping means standing, and shuffling means zombies.  I guess I don’t know what I’m doing, and, after all, maybe that’s the problem.  Or maybe the problem is that dilogy isn’t even a word.

 

Name Ticker 7/26/2013 Change
Brinkley BCO $26.71 -0.89
Charlotte ICE $177.28 -1.71
Dustin DST $69.56 +0.07
Ghost Marisa MOLXA $25.16 +0.05
Icarus FAST $46.68 -0.13
Jenny JNY $16.85 +1.48
Jodi Ann JOY $48.83 -1.43
Justin SCI $18.54 -0.11
Katie CATY $23.95 +0.80
Lee TGI $77.22 -7.78
Lisa LNCE $31.33 +0.59
Lucas LEI $1.41 +0.08
Lulu LULU $69.02 +1.32
Marcus MCS $13.06 +0.15
Mario T.E. MGEE $59.31 -0.99
Mario T.Y. MAR $41.26 -0.36
Namilita NL $11.01 +0.05
Nicole E. NICE $37.23 -1.26
Nicole M. COLM $64.71 +1.76
Reagan REGN $269.21 -5.65
Ruby RJET $13.57 +0.76
Wilson WILC $7.02 -0.13
Winston ED $59.93 -0.55
Zero ZAGG $4.85 +0.13
Zondro ZQK $6.33 -0.11
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