How 4 Big E-Commerce Stocks Stack Up Now

by Traders Reserve | January 29, 2014 4:00 pm

As online retailers and e-commerce-related companies gear up the next shopping splurge surrounding Valentine’s Day, final tallies for the past holiday season are tugging the heartstrings of many investors as companies release fourth-quarter 2013 earnings with those all-important figures included.

Amazon (AMZN) and UPS (UPS) will report earnings on Thursday,  eBay (EBAY) released its results last week and Best Buy (BBY) rolls out its numbers in late February.

The industry as a whole fared well as online shoppers spent $46.6 billion or 10% more in 2013 than the year prior, albeit short of forecasts for 14%, according to comScore.

Reasons for the miss range from a shorter holiday season to economically challenged consumers to mega-discounts that allowed for buying more for less—great for shoppers; not so great for retailers’ bottom lines.

When you look at some of the biggest e-commerce stocks, though, just one very bright star emerged — Amazon — while some others are suffering from a mix of consequences do to either poor or mediocre holiday sales (Best Buy  and eBay ) or in the case of United Parcel Service, the inability to deliver all last-minute orders by Christmas.

Here is how these big stocks in ecommerce stack up now:

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amazon amzn stockThe Amazon (AMZN[2]) story is really starting to sound like a broken record because that’s what they keep doing. The 2013 holiday season, deemed the best ever in the company’s history, saw 426 item sold every seconds for a total of 36.8 million on Cyber Monday.

That represents a 39% increase from last year, which some are attributing to a consumer shift toward smartphone shopping.

More than five toys a second were ordered from a mobile device, and the new Xbox One and PlayStation sold at the rate of more than 1,000 units every minute at the peak of sales between Thanksgiving and Cyber Monday. Furthermore, its annual membership program—Amazon Prime—experienced record sign-ups and sales.

Amazon will deliver its fourth-quarter earnings on Thursday, Jan. 30, and translate the number of orders into dollar figures for shareholders. Last year, the company reported a 45% drop in profit for the quarter and missed earnings estimates. This year it’s a whole different story.

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Best Buy

Best Buy logo Best Buy stock BBYWhile Amazon rolled, Best Buy (BBY[3]) shares tumbled 30% (or $4 billion in market value) after the world’s largest consumer electronics announced dismal first- quarter fiscal 2014 earnings.

While U.S. online sales rose 24% to $1.32 billion during the holidays, they weren’t enough to counter other declines. In the nine weeks to Jan. 4, Best Buy reported sales of $11.45 billion which was down 2.5% compared to a year earlier. After a year of improvements, domestic sales fell by 1.5% to $9.75 billion, due to a 0.9% decrease in comparable store sales.

International revenues also fell 8.1% to $1.70 billion due largely to 35 store closures in China and Canada. Best Buy also blames the lowering of prices by competitors as the main driver of the fall-off in revenue as well as the shortage of some high-end phones.

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eBay ebay stockEbay (EBAY[4]) described its holiday sales as tepid after releasing its fourth-quarter earnings last week.  Ebay earned $850 million, or 65 cents per share in the fourth quarter, up 13% from $751 million, or 57 cents per share, a year earlier. Adjusted earnings were 81 cents per share, beating analysts’ expectations by a penny. Revenue grew 13% to $4.53 billion from $3.99 billion.

However, mobile commerce grew a whopping 88% or $22 billion for 2013 and added 14 million customers.

The company’s global payment arm PayPal, which comprises 40% of eBay’s total revenue, hit $27 billion for the year. The eBay-PayPal one-two punch is firing on all cylinders with enormous growth potential in upcoming years.  Activist investor Carl Icahn, who owns 0.82% of eBay, is pressing the company to spin off the lucrative PayPal business.

Although growth slowed a bit in 2013, eBay has been maintaining double-digit expansion for the last three years. The $70 billion online retailer is projecting a growth rate of 17%-20% annually for the next five years.

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UPS 185Ordinarily UPS (UPS[5]) has an on-time delivery rate of 99%, but the final two Christmas shopping days of 2013 were anything but ordinary. An extraordinary number of procrastinators caused a 63% upswing in orders on Dec. 23 and decreased UPS’ on-time delivery rate to 83%. The company even had to admit to customers that it wouldn’t be able to deliver all its packages on time.

The company hired an additional 30,000 temporary employees than planned and delivered more than 31 million packages that day, a record for the company and 13% above its peak day the year before.

The snafu was bad enough that UPS warned shareholders that it would miss its fourth-quarter earnings target when official figures are released on Thursday, Jan. 30. As a result, shares have fallen 8% in a month.

Despite the disappointing end to 2013, UPS remains confident for 2014. Adjusted earnings are expected to increase by 10%-15% compared to 2013, in line with its long-term targets.

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  2. AMZN:
  3. BBY:
  4. EBAY:
  5. UPS:

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