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Overstock.com (OSTK) to Report Q2 Earnings: What's in Store?

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Overstock.com (OSTK - Free Report) is set to report second-quarter 2021 results on Jul 29.

For the second quarter, the Zacks Consensus Estimate for earnings has been reduced 2.3% to 84 cents per share over the past 30 days.

The consensus mark for revenues is pegged at $766.85 million, indicating a decrease of 2.01% from the year-ago reported figure.

Let’s see how things are shaping up for this announcement.

Overstock.com, Inc. Price and EPS Surprise

Overstock.com, Inc. Price and EPS Surprise

Overstock.com, Inc. price-eps-surprise | Overstock.com, Inc. Quote

Factors to Consider

Overstock.com’s second-quarter 2021 earnings are expected to have benefited from continued demand for e-commerce service despite easing shelter-in-place guidelines and social-distancing measures.

The company’s expanding clientele is likely to have impacted top-line growth positively. In the to-be-reported quarter, tZERO entered into an agreement with Eqvista – an integrated, cloud-based equity management platform. This will enable Eqvista’s clients to opt for tokenization services as well as secondary liquidity to the tZERO ATS, an alternative Trading System which is a FINRA member broker-dealer.

In first-quarter 2021, year-over-year new customer growth was 92% and average order value saw a rise of 17%. Also, year-over-year growth in orders delivered was 66% in the quarter. The momentum is expected to have continued in the second quarter as well.

However, majority of the revenues of the company comes from online home furnishing where it faces significant competition from the likes of Amazon, Wayfair, Walmart and Target. Volatility in retail business might have hurt profitability in the to-be-reported quarter due to stiff competition.

Cost escalations in the form of sales and marketing expenses are expected to have weighed on the bottom line in the to-be-reported quarter.

Key Q2 Development

On Apr 23, 2021, Overstock.com shut down its blockchain fund transaction with third-party venture capital firm Pelion Venture Partners. The sole purpose of this closure is to oversee blockchain assets of Medici Ventures, Overstock’s wholly owned subsidiary focused on blockchain. This transaction has converted Medici Ventures to a limited partnership (the Fund). Pelion is acting as the general partner of that Fund, and Overstock.com is the sole limited partner of the same.

The Fund, with an eight-year lifespan and a total capital commitment of $45 million, will return invested capital to Overstock.com first and then split profits on successful exits per the agreement.

What Our Model Says

Per the Zacks model, 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.

Overstock.com 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 to Consider

Here are some companies worth considering as these have the right combination of elements to beat on earnings this reporting cycle:

AbbVie (ABBV - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #3.

Arch Capital Group (ACGL - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3.

Align Technology (ALGN - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.