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Retail Stocks Q1 Earnings Queued for Apr 26: AMZN & EXPE

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Retail is one of the few sectors which continues to gain traction with the growth of e-commerce market across the world.

The Q1 earnings season has started to gather steam, with results from 87 S&P 500 members having on board as of Apr 20.

Per the latest Earnings Preview, approximately 82.8% of the companies delivered positive earnings surprises, while 67.8% surpassed top-line expectations. Further, 62.1% of these companies have topped the estimates on both the fronts. Earnings of these companies grew 25% from the comparable period last year, while revenues were up 10.7%.

Per the report, total earnings for this sector are projected to be up 11.7% and revenues are expected to be 7.6% higher on a year-over-year basis.

The Retail & wholesale sector is gaining traction globally courtesy of several product launches and stellar performance of grocery and retail market.

Growing e-commerce market, increasing internet user base with higher use of smartphones and tablets have been providing an impetus to the space.

Moreover, with the launch of several easy payment apps online shopping experience has become seamless. Hence, the growing e-commerce market is poised to benefit the sector.

Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Here we take a look at two companies that are set to report Q1 numbers on Apr 26.

Amazon.com, Inc.’s (AMZN - Free Report) strong efforts toward expansion of retail business with the help of strategic partnerships and acquisitions are likely to benefit its top-line growth in the going-to-be-reported quarter.

Amazon Prime remains the key catalyst for its top-line growth. The number of paid subscribers for Prime has exceeded 100 million and this can be attributed to improving video content, music streaming, loyalty offerings and cash back benefits provided by the Prime service.

Further, Amazon’s improving business in the home automation market with Alexa and Echo is helping the company to gain momentum in the market. The acquisitions of Ring and Blink further strengthened its position.

The company’s cloud platform, Amazon Web Services (AWS) also continues to gain traction with growing clientele. Moreover, lower prices and strong focus toward opening more data centers globally improved its competitive position against Alphabet’s (GOOGL - Free Report) Google Cloud and Microsoft’s (MSFT - Free Report) Azure. (Read more: Amazon Q1 Earnings to Benefit from Robust Prime & AWS)

Amazon has a Zacks Rank #1 and an Earnings ESP of +7.04%, which indicates a likely positive surprise in this quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. Price and EPS Surprise | Amazon.com, Inc. Quote

Expedia, Inc.’s (EXPE - Free Report) top line is likely to benefit from its well performing segments — Home Away, Trivago and Egencia. However, weakness in Core OTA segment might hurt results in the going-to-be reported quarter.

HomeAway’s conversion rates are strong and have been increasing year over year. Consistent increase in stayed room night and property night might contribute to HomeAway’s top-line growth.  

Trivago is also expected to witness solid momentum in room-night growth in across all the operating regions.

Egencia is expected to perform well in the to-be-reported quarter driven by the ramp up of Egencia's sales force and increased client acquisitions.

Core OTA segment might suffer due to slower-than-expected room night growth. (Read more: Expedia's Q1 Earnings May Reflect Core OTA Weakness)

Expedia has an unfavorable combination of a Zacks Rank #3 and Earnings ESP of -20.48%. Though the company’s favorable rank increases the odds of a beat, its negative ESP makes earnings surprise prediction difficult.

Expedia, Inc. Price and EPS Surprise

Expedia, Inc. Price and EPS Surprise | Expedia, Inc. Quote

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