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"Whisper"AOL,online services company due to
report earnings tomorrow after the bell. Based on First Call survey of 31 analysts, company
expected to have made $0.14 a share for the quarter, representing an increase of 180% over the
year-ago period. AOL is one of the few Internet companies that market does not always expect to
report blow-out earnings. Over last four quarters, AOL has exceeded analysts' views by an average
of 17%, compared to an average upside surprise of 66% reported by Yahoo! over the same
period. Talk among analysts is that company likely to exceed expectations by about 2 cents
or 14%. AOL shares have rallied 152% since last report. During that period, the stock has been
added to the S&P 500 and the company has announced the acquisition of Netscape
Communications (NSCP). Based on projected 2000 earnings of $0.87 a share, stock carries a
P/E of 177. In spite of corpulent multiple, stock will continue to be favored by money managers,
based on Internet affiliation, robust growth, predictability and discounted valuation relative to other
Internet stocks (on a price/sales basis). Of course, stock's near-term outlook will guided by overall
Internet group sentiment. But like Yahoo!, investors will continue to view pullbacks as an opportunity
to (re)enter stock. In a bull market, investors don't lose confidence in companies until they begin to
disappoint. No disappointments on the horizon here.
Briefing.com |
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