Shares of Twitter gained more than 3% in morning trading Tuesday, just days before the embattled social media company is set to release its fourth-quarter 2016 earnings results. Things are beginning to look up for this stock, but with the company’s long history of struggles, is TWTR a smart buy ahead of earnings?
Earnings Outlook
Heading into the report, our Zacks Consensus Estimates call for a loss of 11 cents per share and revenues of $737.71 million. While this loss would represent an EPS decline of 50% from last year’s -$0.07 figure, our consensus revenue estimate does predict sales growth of nearly 4%.
It is also encouraging to look at Twitter’s earnings surprise streak. In fact, the company has surpassed the Zacks Consensus Estimate by an average of over 38% in each of the trailing four quarters.
However, earnings beats are not the only thing investors are looking for in these reports. In the case of Twitter, investors desperately want to see the company post strong user growth—something that it has consistently struggled with for years now.
Twitter has poured tons of cash into a variety of new features and offerings, including a full-scale investment in sports streaming and live events coverage, but this has yet to result in the widespread growth that many expected.
Furthermore, the Zacks proprietary method of identifying companies that are set to beat on earnings does not look favorable for Twitter right now. The company has seen no earnings estimate revisions over the past 90 days, its Most Accurate Estimate also sits at -$0.11, and its Earnings ESP is currently at 0%.
Bottom Line
With a Zacks Rank #3 (Hold) and an Earnings ESP of 0%, surprise prediction is difficult. Also, it is worth noting that TWTR tends to be very responsive to its earnings release, and that can bring a level of risk many investors would rather pass on.
Nevertheless, there are some areas where Twitter may impress, so it will be important to stay focused on these metrics after the release of the report.
Zacks' Top 10 Stocks for 2017
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Twitter (TWTR) Gains Ahead of Earnings, Should You Buy?
Shares of Twitter gained more than 3% in morning trading Tuesday, just days before the embattled social media company is set to release its fourth-quarter 2016 earnings results. Things are beginning to look up for this stock, but with the company’s long history of struggles, is TWTR a smart buy ahead of earnings?
Earnings Outlook
Heading into the report, our Zacks Consensus Estimates call for a loss of 11 cents per share and revenues of $737.71 million. While this loss would represent an EPS decline of 50% from last year’s -$0.07 figure, our consensus revenue estimate does predict sales growth of nearly 4%.
It is also encouraging to look at Twitter’s earnings surprise streak. In fact, the company has surpassed the Zacks Consensus Estimate by an average of over 38% in each of the trailing four quarters.
However, earnings beats are not the only thing investors are looking for in these reports. In the case of Twitter, investors desperately want to see the company post strong user growth—something that it has consistently struggled with for years now.
Twitter has poured tons of cash into a variety of new features and offerings, including a full-scale investment in sports streaming and live events coverage, but this has yet to result in the widespread growth that many expected.
Furthermore, the Zacks proprietary method of identifying companies that are set to beat on earnings does not look favorable for Twitter right now. The company has seen no earnings estimate revisions over the past 90 days, its Most Accurate Estimate also sits at -$0.11, and its Earnings ESP is currently at 0%.
Bottom Line
With a Zacks Rank #3 (Hold) and an Earnings ESP of 0%, surprise prediction is difficult. Also, it is worth noting that TWTR tends to be very responsive to its earnings release, and that can bring a level of risk many investors would rather pass on.
Nevertheless, there are some areas where Twitter may impress, so it will be important to stay focused on these metrics after the release of the report.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>