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Factors to Know Ahead of Vipshop Holdings' (VIPS) Q2 Earnings

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Vipshop Holdings Limited (VIPS - Free Report) is slated to report second-quarter 2019 results on Aug 14, after the closing bell. The company’s earnings have underperformed the Zacks Consensus Estimate in two of the trailing four quarters, with an average negative surprise of 3.11%.

Let’s discuss how things are shaping up for the upcoming quarterly results.

How Are Estimates Faring?

The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at 16 cents, which indicates growth of 23.1% from the year-ago quarter’s 13 cents. Notably, the Zacks Consensus Estimate has been stable in the past 30 days. The consensus mark for second-quarter revenues is pegged at $3,130 million, suggesting a marginal decline from the prior-year quarter’s reported figure.

Vipshop Holdings Limited Price and EPS Surprise

 

Factors to Consider

Vipshop Holdings focuses on the apparel category in the discount retail segment. This along with the WeChat mini-program and the JD flagship store led to an increase in new customers in the last reported quarter. This also drove the top line. Management earlier anticipated second-quarter revenues to be $2.93-$3.07 billion, implying flat to 5% increase from the year-ago quarter’s reported figure.

However, the company has been reeling under costs hurdles. General and administrative costs along with marketing expenses have been rising for the past few quarters. Persistence of such a dismal trend may negatively impact the company’s upcoming quarterly results. Having said that, management is undertaking cost-cutting efforts to mitigate this headwind.  

What Does the Zacks Model Say?

Our proven model does not show that Vipshop Holdings is likely to beat estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Vipshop Holdings carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores (BURL - Free Report) has an Earnings ESP of +0.35% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation (TGT - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2.

Cisco Systems (CSCO - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #3.

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