AOL (NYSE: AOL) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Tuesday. AOL is a global Web services company whose business consists of online content, products, and services that it offers to consumers, publishers, and advertisers.
What analysts say
- Buy, sell, or hold?: Analysts think investors should stand pat on AOL with eight of 15 analysts rating it hold. Analysts don't like AOL as much as competitor Demand Media overall. Six out of seven analysts rate Demand Media a buy compared to six of 15 for AOL. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
- Revenue forecasts: On average, analysts predict $530.4 million in revenue this quarter. That would represent a decline of 9.2% from the year-ago quarter.
- Wall Street earnings expectations: The average analyst estimate is earnings of $0.01 per share. Estimates range from a loss of $0.03 to a profit of $0.06.
What our community says
Most CAPS All-Stars are skeptical of AOL's prospects, with 64.4% assigning it an underperform rating. Like the All-Stars, the community is also not a fan of AOL with 68.2% awarding it underperform rating. Fools are skeptical of AOL and haven't been shy with their opinions lately, logging 107 posts in the past 30 days. AOL's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.
Management
Revenue has fallen for the past three quarters. The company's gross margin shrank by 15.6 percentage points in the last quarter. Revenue fell 17% while cost of sales rose 6.6% to $388.9 million from a year earlier.
Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.
|
Quarter |
Q1 |
Q4 |
Q3 |
Q2 |
|
Gross Margin |
29.5% |
37.8% |
39.1% |
42.9% |
|
Operating Margin |
(2.1%) |
32.1% |
14.4% |
(228.8%) |
|
Net Margin |
0.9% |
10.8% |
30.5% |
(180.6%) |
For all our AOL-specific analysis, including earnings and beyond, add AOL to My Watchlist.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
