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Globe and Mail
03-06-2025
- Business
- Globe and Mail
Should You Hold on to AMZN Stock in 2H25 Despite its 5.8% YTD Decline?
Amazon 's AMZN stock performance in 2025 has disappointed investors, with shares declining 5.8% year to date despite the company delivering robust first-quarter 2025 results that exceeded expectations. As the e-commerce and cloud computing giant navigates evolving market dynamics, investors face a critical decision: Whether to maintain their positions or wait for better entry opportunities in the second half of 2025. Amazon's first-quarter 2025 results demonstrated the company's operational resilience, with revenues reaching $155.7 billion, representing 9% year-over-year growth. Net income surged 64% to $17.1 billion, while earnings per share climbed to $1.59 from $0.98 in the prior-year period. Operating income expanded 20% to $18.4 billion, significantly outpacing the high end of management's guidance range. The company's diversified revenue streams continued to show strength across segments. North America segment revenues grew 8% to $92.9 billion, while International operations posted 8% growth excluding foreign exchange headwinds. These results suggest Amazon's core retail operations remain robust despite macroeconomic uncertainties and evolving consumer spending patterns. However, free cash flow declined substantially to $25.9 billion from $50.1 billion in the trailing 12 months, primarily due to increased capital expenditures of $87.9 billion focused on AI infrastructure and fulfillment network expansion. This investment cycle reflects Amazon's strategic positioning for future growth, but pressures near-term cash generation. Amazon's valuation metrics raise questions about near-term upside potential. The company's forward 12-month Price-to-Sales ratio of 3.04X stands significantly higher than the Zacks Internet - Commerce industry average of 2X, suggesting the stock may be fully valued at current levels. AMZN's P/S F12M Ratio Depicts Premium Valuation AWS Growth Momentum Despite Capacity Constraints Amazon Web Services maintained its impressive trajectory with 17% year-over-year growth, generating $29.3 billion in quarterly revenues and achieving a $117 billion annualized run rate. AWS operating margins expanded to 39.5%, demonstrating the segment's scalability and pricing power in enterprise cloud adoption. The division faces supply constraints that limit its ability to capture additional AI-driven demand. Management indicated that faster capacity deployment could drive higher revenue growth, suggesting AWS performance may accelerate as infrastructure bottlenecks ease throughout 2025. The AI business alone represents a multi-billion-dollar annual run rate with triple-digit growth rates, positioning AWS advantageously in the generative AI transformation. AWS backlog reached $189 billion with a 4.1-year weighted average life, providing substantial revenue visibility and supporting future growth projections. New customer acquisitions spanning Adobe, Uber, and Nasdaq demonstrate continued enterprise adoption across diverse industries. AI Innovation as a Key Growth Driver Amazon's AI initiatives represent a significant competitive advantage and growth catalyst. Recently, AMZN announced a new and improved agentic Amazon Q Developer experience in the AWS Management Console, Microsoft Teams, and Slack. Amazon Q Developer can now answer more complex queries than ever before in the AWS Management Console chat, offering deeper resource introspection and a dynamic, more interactive troubleshooting experience for users. However, competition in agentic AI is intensifying rapidly with significant advancements from tech giants, including Microsoft MSFT, Nvidia NVDA and Alphabet GOOGL -owned Google. Microsoft is integrating advanced AI agents into its business applications, with new security capabilities being rolled out through Microsoft Security Copilot. Google's collaboration with NVIDIA on next-generation AI hardware will power advanced reasoning models, while NVIDIA itself has launched its Llama Nemotron family of reasoning models specifically for agentic AI platforms. The partnership between LTIMindtree and Google Cloud further demonstrates how enterprise adoption of agentic AI is accelerating across industries. With a 5.8% decline in the year-to-date period, AMZN has underperformed both the broader Zacks Retail-Wholesale sector and the S&P 500, which returned 2.2% and 0.4%, respectively. Shares of Microsoft and Nvidia have returned 9.6% and 2.3% while Alphabet has plunged 10.7%, respectively, in the same time frame. AMZN's Year-to-Date Performance AMZN also launched Claude 4 models through Amazon Bedrock, offering advanced hybrid reasoning capabilities that toggle between instant responses and extended thinking for complex workflows. These models, particularly Claude Opus 4, establish new benchmarks in coding performance and autonomous agent capabilities. The introduction of Alexa+ marks Amazon's evolution toward action-oriented AI agents capable of multi-step task execution. Early user feedback indicates strong adoption potential, though broader deployment remains in early stages. Amazon's Nova foundation models continue expanding with thousands of customers, including Slack, Siemens, and Coinbase, integrating the technology. These AI developments extend beyond AWS into retail operations, where generative AI powers product discovery, review summaries, and personalized shopping experiences. The integration of AI across Amazon's ecosystem creates cross-selling opportunities and enhances customer engagement across touchpoints. Operational Challenges and Tariff Headwinds Amazon faces several operational headwinds that may impact near-term performance. Tariff uncertainty creates inventory management complexities and potential cost pressures, though management expressed confidence in the company's diversified supplier base and operational flexibility. The company has implemented forward buying strategies and inventory repositioning to mitigate potential disruptions. Infrastructure investment requirements strain cash flow generation while positioning Amazon for long-term market leadership. Capital expenditures focused on AI capacity, fulfillment automation, and Project Kuiper satellite deployment represent necessary investments but pressure short-term financial metrics. The Zacks Consensus Estimate for 2025 net sales is pegged at $693.68 billion, indicating growth of 8.73% from the prior-year reported figure. The Zacks Consensus Estimate for 2025 earnings is pegged at $6.31 per share, which indicates a jump of 14.1% from the year-ago period. Find the latest earnings estimates and surprises on Zacks Earnings Calendar. Investment Outlook: Hold or Wait Strategy Amazon's fundamental business strength supports a holding strategy for current investors, particularly given the company's market-leading positions across multiple high-growth sectors. The AI transformation cycle, AWS expansion, and retail innovation initiatives provide multiple avenues for sustained growth acceleration. However, new investors may benefit from waiting for better entry points in the second half of 2025. Potential catalysts, including tariff resolution, AI capacity expansion, and seasonal retail strength, could drive stock appreciation, but current valuations may not fully reflect near-term execution risks. The combination of strong operational performance, strategic AI positioning, and diversified revenue streams makes Amazon attractive for long-term investors willing to navigate short-term volatility. For those seeking optimal entry timing, monitoring AWS capacity deployment progress and macroeconomic developments may reveal more favorable purchasing opportunities ahead. AMZN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report
Forbes
28-05-2025
- Business
- Forbes
What's Happening With CEG Stock?
Constellation Energy Group (NASDAQ: CEG) has seen a significant boost in its stock performance over the past month. This surge is primarily fueled by investor excitement following recent executive orders from U.S. President Donald Trump. These orders aim to streamline the nuclear energy sector by directing the nation's independent nuclear regulatory commission to reduce regulations and accelerate the licensing process for new reactors and power plants. These directives are part of a broader effort to increase U.S. nuclear energy production, a move that comes amid soaring demand from data centers and the artificial intelligence industry. Despite this strong market momentum, concerns about Constellation Energy's valuation persist. While Constellation Energy's recent performance is notable, it pales in comparison to some of its peers in the nuclear energy sector. Oklo has posted an impressive 120% gain in the last month, Centrus Energy is up over 80%, NuScale has climbed 109%, and Vistra has seen a 26% increase. Notably, Constellation Energy Group is significantly larger, with a market capitalization of $97 billion, exceeding the combined market capitalization of the other four companies mentioned. Now, if you seek upside with lower volatility than from individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception. One of the primary concerns for Constellation Energy Group stock is its valuation, which appears stretched. CEG is currently trading at a premium, with a price-to-sales (P/S) ratio of 4.1. This is notably higher than the S&P 500's average P/S ratio of 3.0. Furthermore, its price-to-earnings (P/E) ratio stands at 33x, surpassing the benchmark index's 26x. While this P/S ratio might not seem excessively high at first glance, it's crucial to note that CEG typically trades at a lower multiple. In fact, its current P/S ratio of 4.1x is more than double its average of 1.9x over the past three years, indicating a significant upward shift in its valuation. Constellation Energy Group's recent growth trajectory presents a somewhat mixed picture. While the company has achieved an average annual revenue growth rate of 7% over the past three years, its most recent fiscal year saw a 5% decline in revenues, settling at $23.6 billion. For the last twelve months, that figure stood at $24.2 billion. However, there's a more positive note from its most recent quarterly results, which showed a 10.2% year-over-year jump in revenue. Looking ahead, CEG is in the process of acquiring Calpine Corporation, a move that is expected to boost its sales growth. Calpine brings a substantial portfolio of natural gas, geothermal, battery storage, and solar assets with over 27 gigawatts of generation capacity. Additionally, it includes a competitive retail electric supplier platform that serves approximately 60 terawatt-hours of load annually. Still, based on consensus estimates, the company's sales are projected to reach $23.4 billion in 2026, representing a marginal decline from the $23.6 billion recorded last year. Constellation Energy's profitability metrics present a mixed picture, with some areas indicating challenges. Over the past four quarters, the company reported an Operating Income of $4.7 billion, translating to an Operating Margin of 19.4%. This figure actually surpasses the S&P 500's average of 13.2%. However, a significant concern arises from its Operating Cash Flow (OCF), which was negative $1.6 billion over the same period, resulting in a very poor OCF Margin of -6.8%, notably lagging behind the S&P 500's 14.9%. Despite this, Net Income totaled $3.0 billion, yielding a moderate Net Income Margin of 12.3%, which aligns with the S&P 500's 11.6%. This combination of strong operating and moderate net income margins alongside negative operating cash flow suggests a need to address cash generation efficiency despite otherwise good profitability. Constellation Energy's balance sheet appears generally solid, though with areas for potential enhancement. At the end of the most recent quarter, the company reported $8.4 billion in debt against a substantial market capitalization of $97 billion (as of May 27, 2025). This results in a strong Debt-to-Equity Ratio of 9.1%, which is considerably lower and more favorable than the S&P 500's average of 19.9%. However, a less favorable aspect is its liquidity. Constellation Energy holds $1.8 billion in cash and cash equivalents, which constitutes only 3.5% of its total assets of $52 billion. This poor Cash-to-Assets Ratio falls significantly below the S&P 500's average of 13.8%, indicating less immediate liquidity compared to many peers. While its debt management is robust, the company's lower cash reserves suggest less flexibility for immediate strategic maneuvers or cushioning against unforeseen market shifts. In contrast to some other companies, Constellation Energy Group stock has demonstrated greater resilience than the benchmark S&P 500 index during recent economic downturn. During the 2022 inflation shock, CEG stock experienced a 24.5% decline, falling from a high of $97.16 on November 25, 2022, to $73.40 on March 23, 2023. This performance was slightly better than the S&P 500's peak-to-trough decline of 25.4% during the same period. Notably, CEG stock fully recovered to its pre-crisis peak by July 25, 2023. Since then, the stock has continued its upward trajectory, reaching a high of $347.44 on January 26, 2025, and currently trades around $310. This history suggests a more robust ability to withstand macroeconomic shocks compared to some of its counterparts. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes. Constellation Energy stands as a prominent player in the evolving energy sector, particularly with its leadership in carbon-free power generation, primarily through its nuclear fleet. The company exhibits robust fundamentals, including strong operating margins. However, a key point of consideration is CEG's history of negative free cash flow, indicating substantial capital expenditures that add on to negative cash flows from operations. We believe that CEG's current valuation metrics points to an elevated entry point for value-oriented investors, despite positive investor sentiment and its strong long-term strategic vision in clean energy. Potential investors should carefully weigh CEG's growth prospects against the financial implications of its substantial capital outlays and premium pricing. Now, investing in a single stock like CEG can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
Yahoo
24-05-2025
- Business
- Yahoo
Was Jim Cramer Right About Honeywell International Inc. (HON)?
We recently published a list of . In this article, we are going to take a look at where Honeywell International Inc. (NASDAQ:HON) stands against other stocks that Jim Cramer discusses. Back in 2024, on May 15, Mad Money's Jim Cramer discussed Honeywell International Inc. (NASDAQ:HON) with deep frustration, calling for a breakup to unlock value after ongoing underperformance. 'I'm talking about a company I used to like a lot — I own it for the Charitable Trust — it's been a disappointer and it's called Honeywell. We've been patient — my patience is being tried. It's a consistent underperformer over this period by a significant margin. […] I think they should consider breaking it up, given how well it's worked for United Technologies and GE. The modern Honeywell is just an amalgamation of completely unrelated businesses that have no theme whatsoever. […] At this point, I don't see what Honeywell gets from keeping them under the same roof. […] I've not been happy this year with companies that have not made my trust money. […] Wall Street loves smaller bite-sized companies that are easier to value. The proof is in.' His frustration proved valid, as the stock delivered just 7.87%, lagging badly despite a strong market. A shot of a commercial plane with a blur of color in the background, representing the production of auxiliary power units in the Safety and Productivity Solutions segment. Honeywell International Inc. (NASDAQ:HON) is stuck in a strategic identity crisis as its diverse industrial units fail to deliver consistent upside. During a recent CNBC program, Cramer admitted that he's now looking to buy back some of the company's stock. Here's what he said in February this year: 'But this is the quarter you have to buy because you're finally getting the three pieces. The aerospace business is fantastic. This chemicals business is of course a little bit better than the GDP. And then you have this automation business which has been a disappointment. Overall, HON ranks 7th on our list of stocks that Jim Cramer discusses. While we acknowledge the potential of HON as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than HON and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. 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
Yahoo
23-05-2025
- Business
- Yahoo
Is Mondelez International (MDLZ) Stock Outpacing Its Consumer Staples Peers This Year?
Investors interested in Consumer Staples stocks should always be looking to find the best-performing companies in the group. Mondelez (MDLZ) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Consumer Staples peers, we might be able to answer that question. Mondelez is one of 178 companies in the Consumer Staples group. The Consumer Staples group currently sits at #13 within the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group. The Zacks Rank is a proven system that emphasizes earnings estimates and estimate revisions, highlighting a variety of stocks that are displaying the right characteristics to beat the market over the next one to three months. Mondelez is currently sporting a Zacks Rank of #2 (Buy). Over the past 90 days, the Zacks Consensus Estimate for MDLZ's full-year earnings has moved 4.4% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive. Our latest available data shows that MDLZ has returned about 9.3% since the start of the calendar year. Meanwhile, stocks in the Consumer Staples group have gained about 6.1% on average. As we can see, Mondelez is performing better than its sector in the calendar year. Another Consumer Staples stock, which has outperformed the sector so far this year, is Nomad Foods (NOMD). The stock has returned 6.7% year-to-date. In Nomad Foods' case, the consensus EPS estimate for the current year increased 6.2% over the past three months. The stock currently has a Zacks Rank #1 (Strong Buy). Looking more specifically, Mondelez belongs to the Food - Miscellaneous industry, which includes 41 individual stocks and currently sits at #145 in the Zacks Industry Rank. On average, stocks in this group have lost 5.3% this year, meaning that MDLZ is performing better in terms of year-to-date returns. Nomad Foods is also part of the same industry. Mondelez and Nomad Foods could continue their solid performance, so investors interested in Consumer Staples stocks should continue to pay close attention to these stocks. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report Nomad Foods Limited (NOMD) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research 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
Yahoo
23-05-2025
- Business
- Yahoo
Are Basic Materials Stocks Lagging Galiano Gold (GAU) This Year?
Investors interested in Basic Materials stocks should always be looking to find the best-performing companies in the group. Galiano Gold (GAU) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Basic Materials peers, we might be able to answer that question. Galiano Gold is one of 232 companies in the Basic Materials group. The Basic Materials group currently sits at #6 within the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group. The Zacks Rank is a proven system that emphasizes earnings estimates and estimate revisions, highlighting a variety of stocks that are displaying the right characteristics to beat the market over the next one to three months. Galiano Gold is currently sporting a Zacks Rank of #2 (Buy). Over the past 90 days, the Zacks Consensus Estimate for GAU's full-year earnings has moved 31.6% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive. Our latest available data shows that GAU has returned about 12.2% since the start of the calendar year. Meanwhile, stocks in the Basic Materials group have gained about 5.9% on average. As we can see, Galiano Gold is performing better than its sector in the calendar year. Another Basic Materials stock, which has outperformed the sector so far this year, is Alamos Gold (AGI). The stock has returned 41.5% year-to-date. In Alamos Gold's case, the consensus EPS estimate for the current year increased 0.5% over the past three months. The stock currently has a Zacks Rank #2 (Buy). Looking more specifically, Galiano Gold belongs to the Mining - Gold industry, which includes 39 individual stocks and currently sits at #13 in the Zacks Industry Rank. On average, stocks in this group have gained 45.5% this year, meaning that GAU is slightly underperforming its industry in terms of year-to-date returns. Alamos Gold is also part of the same industry. Galiano Gold and Alamos Gold could continue their solid performance, so investors interested in Basic Materials stocks should continue to pay close attention to these stocks. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Galiano Gold Inc. (GAU) : Free Stock Analysis Report Alamos Gold Inc. (AGI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
