Results were mixed with better iPhone and iTunes sales, but iPad and Mac sales declined and gross margin contracted from 42.8% a year ago to 36.9%. It may be time to think of Apple less as a superior growth stock and more a technology consumer staple, a value name with its trailing P/E of 11.30, and with a 2.80% yield at a 27% payout ratio. That percentage has also risen from 19% just weeks ago.
It has $46.97 in cash per share, up from $41.70 just a few months ago. Its margins are superior to Amazon’s (0.15)% profit margin and 0.95% operating margin at 22.28% and 29.46%, respectively. Apple’s PEG now rests at 0.63.
Amazon’s Q2 earnings weren’t terrible with operating cash flow up 41% and net sales up 22%. However, the net loss of $0.02 per diluted share compared to a net profit of a penny in Q2 of 2012. The forward P/E is now 107.24 with a PEG of 9.37. Despite the loss, the stock is still only 2.5% off its all time high of $309.78.
It was a chock-full release with news of cloud and government FedRAMP compliance, Kindle Appstore, Kindle sales, and on and on but most importantly, CEO Jeff Bezos said, “This past quarter, our top 10 selling items worldwide were all digital products – Kindles, Kindle Fire HDs, accessories and digital content.”
While Amazon’s EPS growth has been (13.58)% for the past five years per annum, its expected five-year EPS growth rate is 37.13%, twice as much as Apple’s 18.28%. All these futuristic visions of mine are predicated on Amazon managing to dramatically expand those margins.
Google reported Q2 earnings that disappointed with cost-per-click ad prices down 6%, and revenue of $11.1 billion and EPS of $9.54 coming in lower than expected. CEO Sergey Brin also stated that the company was planning some “significant capital expenditures.” The stock sold off initially, but news that its Chromecast dongle (a $35 gadget that allows seamless streaming from your TV to other devices) is sold out buoyed the stock.
Analysts see five year EPS growth at 14.50%. The trailing P/E is now 25.78 with a PEG of 1.40. Google still has $163.39 cash per share and its operating and profit margins at 23.94% and 20.85%, respectively, are in-line with Apple.
If past is prologue
Amazon is a company of dreamers and a dream of a stock. All three are, to be fair. These visions could even manifest through Apple or Google. Regardless, any one of these is a buy for five…ten…or twenty years.
The article Dream the Future of Amazon With Me originally appeared on Fool.com and is written by AnnaLisa Kraft.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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