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Square (SQ) to Report Q2 Earnings: What's in the Cards?

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Square, Inc. (SQ - Free Report) is scheduled to report second-quarter 2020 results on Aug 5.

For second-quarter 2020, the Zacks Consensus Estimate for revenues stands at $1.14 billion, reflecting a decline of 2.9% from the prior-year quarter.

Further, the Zacks Consensus Estimate for second-quarter bottom line is pegged at a loss of 8 cents per share, which has narrowed from 9 cents per share over the past seven days. Notably, the company reported earnings of 21 cents per share in the year-ago quarter.

The company has surpassed the Zacks Consensus Estimate in three of the trailing four-quarters and missed the same once. It has a trailing four-quarter negative earnings surprise of 11.03%, on average.

Square, Inc. Price and EPS Surprise

Square, Inc. Price and EPS Surprise

Square, Inc. price-eps-surprise | Square, Inc. Quote

Factors to Note

The company’s comprehensive commerce ecosystem that helps it in attracting new sellers and retaining existing ones is likely to have strengthened seller base in the quarter to be reported.

Further, Square’s robust product portfolio might get reflected in the second-quarter results.

Moreover, integrations among the company’s product lines,which deliver enhanced user experience, might contributed to seller base growth in the to-be-reported quarter.

Additionally, Square’s omni-channel offerings, which help sellers in creating differentiated customer experience on the back of customerinsights by managing orders from the point of sale and eliminating manual aggregation of online and in-person orders, may have driven seller base in the second quarter.

All these factors are likely to have accelerated Square’s gross payment volume (GPV),which isakey growth metric for the company, during the quarter under review.

Hence, this is likely to get reflected in the second-quarter revenues.

However, higher investments and increasing product development expenses might have weighed on Square’s second-quarter profitability.

Furthermore, uncertainties related to ongoing pandemic remained headwinds. Accumulating reserves for transaction and loan losses owing to the expected impact from coronavirus pandemic on losses in future are expected to get reflected in the second-quarter results.

The temporary stop on subscription billings and waived subscription fees on software for sellers might have impacted Square’s subscription revenues in the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predictanearnings beat for Square this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Square has an Earnings ESP of -19.36% and a Zacks Rank #3.

Stocks to Consider

Here are somestocks you may consider, as our proven model shows that thesehave the right combination of elements to post an earnings beat this quarter.

JD.com, Inc. (JD - Free Report) has an Earnings ESP of +13.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

GoPro, Inc. (GPRO - Free Report) has an Earnings ESP of +9.86% and a Zacks Rank #2.

Wayfair, Inc. (W - Free Report) has an Earnings ESP of +38.12% and a Zacks Rank of 3.

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