The combination of innovative product launches, holiday promotions, and the ongoing consumer interest in smart gadgets positions the tech industry for a strong sales performance during the holiday season. Therefore, we look into sound consumer tech giants, such as Amazon.com, Inc. (AMZN), HP Inc. (HPQ), and Canon Inc. (CAJPY).
The number and value of online sales are on an upward trajectory. In fact, in 2024, global e-commerce sales will likely surpass $7 trillion in value. This growth is being fueled by a number of factors, including the rise of mobile shopping, the growth of social media, and the increasing popularity of subscription services.
Moreover, retailers typically offer significant holiday discounts, especially during events like Black Friday and Cyber Monday, driving consumers to upgrade or purchase tech products as gifts. According to recent data from 1,000 U.S. adults and Vericast's 2024 Holiday Retail TrendWatch, 41% of consumers are planning to splurge on gifts for themselves this holiday season.
Thus, keeping the holiday season in mind, let us dig deeper into the fundamentals of the featured consumer tech giants in detail:
Amazon.com, Inc. (AMZN)
AMZN is a global giant in the retail sector, offering consumer products, advertising, and subscription services through online and physical stores across North America and international markets. The company operates through three segments: North America; International; and Amazon Web Services (AWS).
On July 18, AMZN announced record-breaking sales from its biggest Prime Day event ever. Prime members took advantage of millions of deals over 35 categories, saving billions in the process. The company’s new AI-powered shopping assistant, Rufus, also helped millions of customers navigate the vast selection quickly and easily.
Over the 48-hour event, small and medium-sized businesses sold more than 200 million items. The event also led to a surge in Prime memberships, with millions of new members signing up in the weeks leading up to Prime Day.
In terms of the trailing-12-month net income margin, AMZN’s 7.35% is 59.3% higher than the 4.62% industry average. Similarly, its 9.79% trailing-12-month levered FCF margin is 82.2% higher than the industry average of 5.38%. Also, its trailing-12-month ROCE of 21.93% compares to the industry average of 11.53%.
For the second quarter of 2024, which ended on June 30, AMZN’s total net sales increased 10.1% year-over-year to $147.98 billion, while the operating income stood at $14.67 billion, up 91% year-over-year. Its net income amounted to $13.48 billion, representing an increase of 99.8% from the last year. Also, the company’s EPS for the quarter increased 93.8% year-over-year to $1.26.
Street expects AMZN’s revenue and EPS for the fiscal third quarter (ending September 2024) to increase 9.9% and 20.5% year-over-year to $157.27 billion and $1.13, respectively. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
Shares of AMZN have gained 19.7% over the past nine months to close the last trading session at $173.33.
AMZN’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AMZN has an A grade for Sentiment and a B for Momentum and Quality. It is ranked #14 out of 52 stocks in the B-rated Internet industry. Click here to see the additional ratings for AMZN (Growth, Value, and Stability).
HP Inc. (HPQ)
HPQ provides personal computing and other digital access devices, imaging and printing products, and related technologies, solutions, and services worldwide. The company operates through three segments: Personal Systems; Printing; and Corporate Investments.
For the third quarter that ended July 31, 2024, HPQ’s total net revenue increased 2.4% year-over-year to $13.52 billion. The company’s non-GAAP earnings from operations stood at $1.09 billion. Furthermore, the company’s non-GAAP net earnings came in at $819 million or $0.83 per share.
Analysts expect HPQ’s revenue and EPS for the fourth quarter (ending October 2024) to increase 1.7% and 3.7% year-over-year to $14.05 billion and $0.93, respectively.
HPQ’s shares have gained 21.6% over the past six months and 16.3% over the past year to close the last trading session at $35.33.
HPQ’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has a B grade for Quality and Value. The stock is ranked #12 out of 40 stocks in the B-rated Technology - Hardware industry.
Click here to access the additional HPQ ratings (Growth, Momentum, and Stability).
Canon Inc. (CAJPY)
Headquartered in Tokyo, Japan, CAJPY is a global manufacturer and seller of office multifunction devices, printers, cameras, medical equipment, and lithography equipment. It operates through its Printing Business Unit; Imaging Business Unit; Medical Business Unit; Industrial Business Unit; and Others segments.
CAJPY’s trailing-12-month EBIT margin of 9.26% is 89.3% higher than the industry average of 4.89%. Its trailing-12-month Return on Total Capital of 5.72% is 114.3% higher than the industry average of 2.67%.
During the second quarter, which ended June 30, 2023, CAJPY’s sales increased 14.7% from the previous year’s quarter to ¥1.17 trillion ($8.09 billion). Its operating profit increased 28.3% year-over-year to ¥118.39 billion ($818.42 million). The company’s net income attributable to owners of parent grew 37.4% year-over-year to ¥89.86 billion ($621.20 million).
Street anticipates CAJPY’s revenue to surge by 13.3% year-over-year to $7.73 billion for the third quarter ending September 2024. The stock has gained 16.4% over the past six months and 39.8% over the past year to close the last trading session at $34.32.
CAJPY’s POWR Ratings reflect bright prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
The stock has a B grade for Stability and Quality. It is ranked #4 in the 40-stock Technology - Hardware industry.
Beyond what is stated above, we’ve also rated CAJPY for Momentum, Sentiment, Growth, and Value. Get all CAJPY ratings here.
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AMZN shares were trading at $177.53 per share on Thursday afternoon, up $4.20 (+2.42%). Year-to-date, AMZN has gained 16.84%, versus a 16.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
3 Consumer Tech Stocks to Buy as Holiday Gifts Drive Sales StockNews.com
