Weekly Winners and Losers: Helped and Hurt by e-Commerce

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Sep. 25 2017, Updated 8:12 a.m. ET

Adobe and Bed Bath & Beyond top the weekly losers’ list

Is Bed Bath & Beyond (BBY) another Amazon (AMZN) victim? We’re seeing e-commerce cannibalization at least. The stock fell 15% and continued to drift lower while hitting lows not seen since mid-2010. Wall Street still has earnings falling 3% in 2018. The multiple has fallen to 7x estimated 2018 earnings—still toxic for now.

Adobe (ADBE) is really a victim of its own success. After posting 24% revenue growth in 2017, it looks to slow to 19% in 2018. So, it isn’t a trainwreck by any stretch. The company did just top out at 9.5x next 12-month sales—its all-time high. Stocks hitting all-time high forward multiples in front of a deceleration are tricky. Now, the stock is $9 from its recent high of $156.

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FedEx and CarMax looking up

FedEx (FDX) rose to all-time highs after its earnings report. The real reason seems to be the comments on the call—very positive comments about e-commerce sales and the outlook. The numbers also flipped from 7% earnings growth in 2017 to what looks like 17% in 2018. People expect good things in 2018. They’re only paying 15.5x 2018 estimated earnings to get that growth. Thanks e-commerce!

It looks like the swoon in used auto sales is over. CarMax (KMX) posted better-than-expected earnings and rose as much as 7% during Friday’s session. The company spoke about its dynamic pricing model and said that prices rose. The company’s CEO should be writing a letter to Amazon that starts “Dear Mr. Bezos, please do not get into the used auto business – it is not right for you.”

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