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Groupon (GRPN) to Report Q4 Earnings: What's in the Offing?

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Groupon, Inc. (GRPN - Free Report) is scheduled to report fourth-quarter 2020 results on Feb 25.

The Zacks Consensus Estimate for loss per share has been steady at loss of 18 cents in the past 30 days. In the fourth quarter of 2019, Groupon had reported non-GAAP earnings per share of 7 cents.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $281.8 million, which indicates a decline of 54% from the year-ago quarter’s reported figure.

Groupon, Inc. Price and EPS Surprise

 

Groupon, Inc. Price and EPS Surprise

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

 

Notably, the company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while missing in the remaining quarter. It has a trailing four-quarter earnings surprise of 38.4%, on average.

Q3 at a Glance

In third-quarter 2020, the company generated revenues of $304 million, down 38.7% from the year-ago quarter’s reported figure and 23.2% sequentially.

Non-GAAP earnings per share during the quarter were 15 cents compared with non-GAAP earnings of 27 cents per share reported in the year-ago quarter and non-GAAP loss per share of 93 cents reported in the previous quarter.

Let’s see how things have shaped up prior to this announcement.

Factors to Note

Groupon’s fourth-quarter revenues are likely to reflect the negative impact of the ongoing pandemic on restaurants and travel bookings. Further, these sectors are likely to have been hit hard due to the re-imposition of shelter-in-place guidelines across several countries.

Further, higher investments on platform enhancement amid intense competition in the e-commerce space are also anticipated to have put pressure on fourth-quarter EBITDA.

Nonetheless, Groupon’s fourth-quarter performance is expected to have been cushioned by restructuring efforts as well as its continuing pivot strategy.

The company has adopted an ambitious cost-containment strategy. In third quarter of 2020, Groupon began its second phase of the restructuring initiative. Fourth-quarter margins are anticipated to have benefitted from restructuring efforts.

As a part of its pivot strategy, Groupon has been expanding inventory to boost billings growth and improve purchase frequency.  

Moreover, the company is reducing restrictions on its deeply-discounted deals and enabling customers to purchase such deals many times.

The daily deals provider is also working on improving its merchant and customer experiences to drive growth. The company is also focusing on local experiences marketplace as this market presents significant revenue growth opportunity. Initiatives to improve quality and all-time-available inventory is likely to have attracted more consumers to its platform.

In the third quarter of 2020, Groupon rolled out sponsored listings tool to assist merchants in expanding consumer reach. Also, it unveiled Google two-way calendar sync that will facilitate merchants to manage booking leveraging the Google Calendar.  

Groupon has been adding new features to its platform like map-based search feature, along with optimizing relevance and search results to enhance customer experience.

These initiatives are likely to have contributed to the top line in the to-be-reported quarter.

Key Developments in Q4

In November 2020, Groupon teamed up with digital travel booking and reservation platform, Xola for its Groupon Connect platform. The collaboration will facilitate merchants on Xola’s platform to link their Xola bookings to the Groupon promotions.

What the Zacks Model Unveils

Our proven model does not predict an earnings beat for Groupon 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. But that’s not the case here.

Groupon has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

CrowdStrike. (CRWD - Free Report) has an Earnings ESP of +13.92% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Workday (WDAY - Free Report) has an Earnings ESP of +1.21% and currently carries a Zacks Rank of 2.

Autodesk (ADSK - Free Report) has an Earnings ESP of +2.29% and carries a Zacks Rank of 2, at present.

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