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Internet Stocks: 2 to Buy & 2 to Sell

The Internet is a vast, infinite world within a world – similar to a matryoshka doll. You can watch television, purchase products, communicate with friends, and learn new information all from the comfort of your chair; there is no longer a need for human interaction.

Just like in the real world, there are many Internet-based companies for individuals to invest in and to sell off. Let’s take a look at four companies that operate in the world wide web to determine which two you may want to consider investing in and two companies that you may either want to stay away from or sell.

Buy: Facebook Inc. (FB)

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In case you are not familiar, Facebook Inc. operates a vastly popular social networking website that spans the globe. Facebook has a Zacks Rank #2 (Buy) and has an aggregate VGM (value, growth, momentum) grade of “B.”

During the most recent earnings quarter, Facebook outperformed our earnings estimate by 18%. For the current earnings period ending in March 2016, there have been three positive earnings revisions, one each in the past seven, thirty, and sixty days. Furthermore, the social media company’s EPS growth versus the previous quarter increased 63.89%, and versus the previous year, the EPS growth increased 84.37%.

Facebook’s sales growth versus the previous quarter and year increased 29.77% and 51.67%, respectively. Operating margin figures for the company were 21.42 for the third quarter 2015 fiscal year and 23.59 for the fourth quarter 2015, an increase of 10.1%. Net margin figures were 17.64 for the 2015 third quarter and 20.47 for the period ending in  ensuing fourth quarter, an increase of 16%.

Sell: LinkedIn Corp. (LNKD)

Image via forbes.com

“Facebook for professionals” LinkedIn Corp is essentially a social media platform that is your online resume and allows individuals to professionally network with other professionals. LinkedIn has a Zacks Rank #4 (Sell) and has an aggregate VGM grade of “C.”

Despite outperforming our earnings estimates the past three quarters, LinkedIn’s earnings estimate figure decreased from $0.00 in the company’s fourth quarter of their fiscal 2015 to -$0.27 in the current earnings quarter ending in March 2016. The professional social media website’s stock dropped roughly 42.83% since early February. Furthermore, LinkedIn’s percentage price change relative to the S&P 500 is -8.36% over a four-week period, -49.91% in a twelve-week period, and -49.34% year to date.

Operating margin figures for the company were -1.82 for their 2015 third quarter and -1.09 for 2015 fourth quarter. Net margin figures were -5.33 for the third quarter and -5.32 for the fourth quarter.

Buy: Etsy Inc. (ETSY)

Image via entrepreneur.com

Homemade knick-knack marketplace Etsy Inc. has a Zacks Rank #1 (Strong Buy). The company posted positive earnings figures for the first time in four quarter in their fourth quarter of their fiscal 2015 year, outperforming our EPS estimate. Etsy’s percentage price change relative to the S&P 500 is 9.66% in a twelve-week period and 3.50% year-to-date.

Etsy’s EPS growth versus the previous quarter increased 183.33%, and versus the previous year, the EPS growth increased 141.67%. Its sales growth versus the previous quarter and year increased 33.79% and 35.41%, respectively.

Debt-Equity and debt-to-capital figures are low for Etsy. For the earnings quarter of both September and December 2015, the company’s debt-to-equity figure was 0.18. For the earnings quarter of September 2015, Etsy’s debt-to-capital figure was 15.29 and 15.23 for the earnings quarter of December 2015.

Sell: Pandora Media, Inc. (P)

Image via bezinga.com

Internet radio service Pandora Media has a Zacks Rank #4 (Sell) and has an aggregate VGM grade of “F.” Pandora missed our earnings estimate in the fiscal 2015 fourth quarter by 16.67%. The company’s earnings estimate figure also decreased from -$0.06 in that fourth quarter to -$0.43 in their fiscal 2016 first quarter.

Between the 2016 first quarter and the second quarter ending in June 2016, Pandora has had a total of eight negative earnings revisions over the past 60 days. For the current year, the company also has a total of eight negative earnings revisions.

Net margins and operating margins for Pandora have gotten worse quarter-over-quarter. In the third quarter earnings period ending in September 2015, the net margin figure was -12.59 and -14.57 in the 2015 fourth quarter, which is a decrease of 15.73%. Operating margin figures for the 2015 third quarter for Pandora was -5.24, and -7.26 in the period ending in fourth quarter, which is a decrease of 38.55%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>


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
 
FACEBOOK INC-A (FB): Free Stock Analysis Report
 
LINKEDIN CORP-A (LNKD): Free Stock Analysis Report
 
PANDORA MEDIA (P): Free Stock Analysis Report
 
ETSY INC (ETSY): Free Stock Analysis Report
 
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