It has been about a month since the last earnings report for Wayfair (
W Quick Quote W - Free Report) . Shares have added about 33.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wayfair due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wayfair Surpasses Q4 Earnings Estimates
Wayfair reported fourth-quarter 2020 non-GAAP earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of 91 cents.
Total revenues came in at $3.67 billion, up 44.9% year over year. However, the figure missed the Zacks Consensus Estimate of $3.75 billion. The year-over-year increase in revenues was driven by strong acceleration in new and repeat customer orders. Also, increase in active customers and strength in the company's direct retail business aided year-over-year revenue growth. Quarter in Detail
Net revenues in the United States increased 40.1% year over year to $3 billion and international net revenues grew 70.7% to $671.8 million.
Active customers increased 53.7% from the prior-year quarter to 31.2 million. Moreover, LTM net revenues per active customer increased 1.1% year over year to $453 million. Total number of orders delivered in the reported quarter was 16.5 million, up 47.1% year over year. In addition, orders per customer for the quarter were 1.96 million, reflecting an increase of 5.4% from the year-ago period. Further, repeat customers placed 11.9 million orders in the fourth quarter, up 55.6% year over year. Operating Results
For the fourth quarter, Wayfair’s gross margin was 29%, up 620 basis points on a year-over-year basis.
Adjusted EBITDA margin was 7.2% versus (7.1%) in the year-ago quarter. The company’s operating expenses of $827.3 million increased 5.8% year over year. Operating income was $100.6 million versus the prior-year loss of $305.4 million. Balance Sheet & Cash Flow
At fourth quarter-end, cash, cash equivalents and short-term investments were $2.6 billion, flat with the prior quarter. Accounts receivables were $110.3 million, up from $109.7 million in the third quarter.
Cash from operations was $206.7 million and capital expenditure totaled $39.7 million. Free cash flow was $128.3 million compared with $255 million in the third quarter. How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 45.63% due to these changes.
At this time, Wayfair has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Wayfair has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.