Tuesday Earnings Roundup

A look at how companies closed out 2020.
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Amazon is expected to “cap off its pandemic-fueled 2020 financial performance with record quarterly sales driven by a surge in online holiday shopping with people stuck at home,” WSJ reports.

  • Expected Revenue: $119.7 Billion (+37%)
  • Expected Net Income: $3.7 Billion (+12%)

Thanks to holiday spending driving an acceleration in digital advertising purchases, Alphabet’s Google is expected to post strong fourth-quarter results, WSJ reports.

  • Expected Revenue: $52.67 Billion (+14%)
  • Expected Profit: $11.87 Billion (+28%)

Pfizer expects to do roughly $15 billion in sales for its Covid-19 vaccine this year as it posted high revenue but less-than-expected profit in 2020, WSJ reports.

  • Revenue: $11.68 Billion (+12%)
  • Q4 Net Income: $594 Million (+276%)

UPS notched a 21% increase to record fourth-quarter sales of $24.9 billion after the pandemic “fueled online shopping during the holidays,” WSJ reports.

  • Sales: $24.9 Billion (+21%)
  • Net Loss: $3.26 Billion (-595%)

In one of the most “challenging” years Exxon Mobil experienced, the oil giant posted its fourth consecutive quarterly loss, which amounted to $22 billion in total losses for the fiscal year, WSJ reports.

  • Revenue: $46.54 Billion (-31%)
  • Q4 Loss: $20.07 Billion (-453%)

BP returned to profitability in Q4 but said “the pandemic, which battered the oil-and-gas industry in 2020, would continue to challenge its business this year,” WSJ reports

  • 2019 Q4 Revenue: $71.1 Billion
  • 2020 Q4 Replacement Cost Profit: $825 Million (+20725%)

Justin Oh:

What kind of company makes $380 billion in revenues per year and can grow 35% at the same time? Beastly Bezos and his Amazonians are out to conquer the western world with complete disregard for any Total Addressable Market (TAM) limitations. 

Long-term, it’s best not to bet against Bezos, especially with $AMZN trading at a not-unreasonable 23.8x forward EBITDA. The only thing to look out for is antitrust regulation.

The clear losers of the pandemic are in the oil and gas (O&G) industry. Unfortunately the massive reduction of automobile mobility from quarantine, combined with excess supply issues (remember the Russia/Saudi Arabia spat last year?), has driven demand and prices down, which destroys the economics for the industry.

In the second half of last year, I remember saying that if an investor wanted to bargain hunt in O&G, he or she should err on the side of safety with the large, vertically-integrated players like Exxon ($XOM) or BP ($BP) because of their diversification and capital resources to survive an extended lockdown.

Indeed that is probably still my stance, although $XOM and $BP look less attractive now that their stock prices have recovered about 30% since then. They have recovered to around the same multiples they were at in 2019, except on forward 2021 expectations that include a 20-25% recovery. Any delay in that recovery won’t be great for the stocks. 

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