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Which FANG Stock Did the Best This Earnings Season?

Each earnings season, investors eagerly await for the FANG stocks—Facebook, Amazon, Netflix, and Google (now Alphabet)—to report their quarterly results. Which stock did the best this time around? Let’s take a look at how this earnings season turned out for each tech giant to determine the answer.

Facebook, Inc. FB

The ubiquitous social networking company reported impressive Q1 results. Adjusted earnings per share of $0.57 (accounting for stock-based compensation and other non-recurring items) beat the Zacks Consensus Estimate of $0.44 per share. Revenues came in at $5.382 billion, edging past our consensus estimate of $5.234 billion.

Facebook’s consistently growing user base was a big catalyst for the company’s results. Its monthly active users (MAUs) grew 15% year-over-year to 1.65 billion, and mobile MAUs grew 21% year-over-year to 1.51 billion. Daily active users (DAUs) were 1.09 billion and mobile DAUs were 989 million, each growing 16% and 24% year-over-year, respectively.

Mobile ad revenues for the quarter were $4.2 billion, soaring 75% year-over-year.

At the end of Q1, Facebook had cash and cash equivalents and marketable securities of $20.62 billion, up 11.7% year-over-year. Free cash flow was $1.85 billion compared to the $1.19 billion in the year-ago quarter.

Amazon.com Inc. AMZN

Like Facebook, Internet retailer Amazon knocked Q1 estimates out of the park. Earnings per share of $1.07 crushed the Zacks Consensus Estimate of $0.61. Revenues came in at $29.13 billion, topping our Zacks Consensus Estimate of $27.94 billion and increasing 28.2% year-over-year.

Amazon Web Services (AWS), Amazon’s dark horse, brought in $2.566 billion in revenue during the first quarter, reflecting growth of 64% year-over-year. And after expenses, AWS was responsible for $604 million in operating income, up over 200% from the same quarter last year.

No numbers on the company’s Prime membership were reported, but the subscription service has been growing steadily at over 50% over the last two years.

Amazon ended Q1 with a cash and short-term investments balance of $15.86 billion, down $3.95 billion during Q1. It used $2.16 billion of cash in operations, spending $1.18 billion on fixed assets (including internal-use software and website development costs), as well as $16 million on acquisitions.

Netflix Inc. NFLX

The video streaming titan reported earnings per share of $0.06, surpassing the Zacks Consensus estimate of $0.03. Revenues rose 24.4% year-over-year to $1.958 billion thanks to higher revenues from both international and domestic streaming but fell behind our consensus estimate of $1.965 billion.

In the quarter, Netflix recorded 6.7 million new members, up significantly in comparison with 4.9 million in the prior-year quarter. Now, the company has a total of 81.5 million subscribers across the globe. Paid members came in at 77.7 million, up from 59.6 million in the year-ago quarter.

Operating income for both its streaming and DVD business plummeted 49.5% year-over-year to $49 million. Net income came in at $28 million, up from the $24 million in the year-ago quarter.

As of March 31, 2015, Netflix had $2.1 billion in cash, cash equivalents, and short-term investments compared with $2.3 billion as of December, 31, 2015. Cash used in operations was $228.6 million for the quarter and non-GAAP free cash outflow was $260.6 million.

Alphabet, Inc. GOOGL

Formerly known as Google, Alphabet reported weaker than expected Q1 results. Adjusted earnings per share of $6.02 missed the Zacks Consensus Estimate of $6.36. Revenues came in at $16.47 billion, increasing 17% year-over-year but falling 5% sequentially; sales just missed our consensus estimate of $16.51 billion.

This is the second quarterly earnings report since the company underwent a major restructuring initiative last year. Alphabet reports Google as a single segment, while all other businesses were combined as Other Bets; segmental Google revenues were up 17% year-over-year from Google websites, Google Network Members’ websites, and Google advertising.

Total acquisition costs were $43.8 billion, accounting for 21% of total advertising revenue. This highlights Alphabet’s ongoing shift to mobile advertising as well as the growing importance of programmatic advertising. Cost per click (CPC) was down 9% year-over-year, but paid clicks were up 29% in the same time frame.

Cash, cash equivalents, and marketable securities, as of March 31, 2016, were $75.264 billion, up significantly from the year-ago period. Free cash flow was $5.230 billion during the same time period.

Bottom Line

And the winner is: Amazon.

The Internet retailer’s Q1 numbers are a clear indication that Amazon is driving value across all its businesses. Its retail division continues to be difficult to beat on price, choice, and especially convenience. If the company is able to expand this success internationally, investors could see far more growth.

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AMAZON.COM INC (AMZN): Free Stock Analysis Report
 
NETFLIX INC (NFLX): Free Stock Analysis Report
 
FACEBOOK INC-A (FB): Free Stock Analysis Report
 
ALPHABET INC-A (GOOGL): Free Stock Analysis Report
 
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