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What's in the Cards for Expedia (EXPE) in Q3 Earnings?

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Expedia (EXPE - Free Report) is set to report third-quarter 2016 results on Oct 27 after the bell. Last quarter, the company posted a 9.09% negative earnings surprise.

Let’s see how things are shaping up for this announcement.

Factors at Play

Expedia has been making a large number of acquisitions and integrating them into its core platforms. The Orbitz acquisition was substantially completed in the first quarter and contributed significantly to volumes.

At the same time, the company is preparing for a stock market listing of Trivago. Expedia will not be selling any shares it currently holds but will raise fresh capital through the IPO. 

Management said going into the year that full-year ex-eLong adjusted EBITDA will be up 35-45%, although the first half will be weak, likely due to the ongoing integrations. Both Orbitz and HomeAway are expected to make a nice contribution.

The company has increased spend on Facebook (FB) with the engineering teams of the two companies working together.

EXPEDIA INC Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Expedia will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Most Accurate estimate is pegged at $2.13 whereas the Zacks Consensus Estimate stands at $2.24 cents. Therefore, its Earnings ESP is -4.91%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Expedia’s Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

You may consider the following stocks, with a positive Earnings ESP and a favorable Zacks Rank:

Amazon.com, Inc. (AMZN - Free Report) with an Earnings ESP of +10.47% and Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeco Instruments Inc. (VECO - Free Report) with an Earnings ESP of +17.86% and Zacks Rank #1.

NVIDIA Corporation (NVDA - Free Report) , with an Earnings ESP of +8.93% and a Zacks Rank #3.

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