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The Zacks Consumer Discretionary Sector has tumbled year-to-date, decreasing more than 30% in value and extensively underperforming the general market. However, the sector has posted a 2.6% return over the last month, marginally better than the S&P 500’s 1.4% return.
The chart below illustrates the sector’s performance vs. the S&P 500 over several timeframes.
Image Source: Zacks Investment Research
The relatively strong share performance over the last month could indicate that the selling is over.
One company residing in the sector, Roku (ROKU - Free Report) , is slated to release quarterly results on July 28th (Thursday) after the trading session ends. Roku is a massive entertainment giant and is the leading TV streaming platform provider in the U.S. based on total hours streamed.
Let’s take a look at how the streaming giant shapes up heading into its quarterly release.
Share Performance & Valuation
It’s been anything but enjoyable for Roku investors over the last year, with shares losing more than 80% of their value. Simply put, it’s been a fall from glory for Roku shares.
Image Source: Zacks Investment Research
Even over the last month, shares have lost nearly 15% in value.
Image Source: Zacks Investment Research
The less-than-favorable price action is undoubtedly a concern, indicating that sellers have completely controlled Roku shares, pushing bulls out of the arena left and right.
In addition, Roku shares could be overvalued, as displayed by its Style Score of a D for Value.
The company’s 3.2X forward price-to-sales ratio is well below its five-year median of 9.9X but represents a staggering 98% premium relative to its Zacks Sector.
Image Source: Zacks Investment Research
Quarterly Estimates
Analysts have been bearish for the quarter to be reported over the last 60 days, with two negative estimate revisions hitting the tape. In addition, the -$0.77 Zacks Consensus EPS Estimate reflects a disheartening 250% drop in quarterly earnings year-over-year.
Image Source: Zacks Investment Research
However, the company’s top-line is in much better shape, with the $804 million quarterly revenue estimate penciling in a solid double-digit 25% uptick in quarterly revenue year-over-year. The chart below illustrates the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Quarterly Performance & Market Reactions
Roku has consistently topped the Zacks Consensus EPS Estimate, recording nine bottom-line beats over its previous ten quarters. However, the company’s one bottom-line miss came in its latest quarter.
Top-line results have primarily been rock-solid as well – Roku has recorded eight top-line beats over its last ten quarters.
Be prepared for volatility following the quarterly report; over the company’s last four EPS beats, shares have moved downwards three times by at least 14%.
Bottom Line
Roku (ROKU - Free Report) shares are the victim of one of the deeper valuation slashes we’ve seen over the last year. In addition, shares appear elevated in terms of valuation, and earnings are forecasted to shrink by a triple-digit percentage.
However, the company has consistently reported top and bottom-line results above expectations, and revenue is forecasted to register solid growth.
Heading into the quarterly report, Roku is currently a Zacks Rank #3 (Hold) with an Earnings ESP Score of -5%.
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Roku Q2 Preview: Can Shares Get Back on Track?
The Zacks Consumer Discretionary Sector has tumbled year-to-date, decreasing more than 30% in value and extensively underperforming the general market. However, the sector has posted a 2.6% return over the last month, marginally better than the S&P 500’s 1.4% return.
The chart below illustrates the sector’s performance vs. the S&P 500 over several timeframes.
Image Source: Zacks Investment Research
The relatively strong share performance over the last month could indicate that the selling is over.
One company residing in the sector, Roku (ROKU - Free Report) , is slated to release quarterly results on July 28th (Thursday) after the trading session ends. Roku is a massive entertainment giant and is the leading TV streaming platform provider in the U.S. based on total hours streamed.
Let’s take a look at how the streaming giant shapes up heading into its quarterly release.
Share Performance & Valuation
It’s been anything but enjoyable for Roku investors over the last year, with shares losing more than 80% of their value. Simply put, it’s been a fall from glory for Roku shares.
Image Source: Zacks Investment Research
Even over the last month, shares have lost nearly 15% in value.
Image Source: Zacks Investment Research
The less-than-favorable price action is undoubtedly a concern, indicating that sellers have completely controlled Roku shares, pushing bulls out of the arena left and right.
In addition, Roku shares could be overvalued, as displayed by its Style Score of a D for Value.
The company’s 3.2X forward price-to-sales ratio is well below its five-year median of 9.9X but represents a staggering 98% premium relative to its Zacks Sector.
Image Source: Zacks Investment Research
Quarterly Estimates
Analysts have been bearish for the quarter to be reported over the last 60 days, with two negative estimate revisions hitting the tape. In addition, the -$0.77 Zacks Consensus EPS Estimate reflects a disheartening 250% drop in quarterly earnings year-over-year.
Image Source: Zacks Investment Research
However, the company’s top-line is in much better shape, with the $804 million quarterly revenue estimate penciling in a solid double-digit 25% uptick in quarterly revenue year-over-year. The chart below illustrates the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Quarterly Performance & Market Reactions
Roku has consistently topped the Zacks Consensus EPS Estimate, recording nine bottom-line beats over its previous ten quarters. However, the company’s one bottom-line miss came in its latest quarter.
Top-line results have primarily been rock-solid as well – Roku has recorded eight top-line beats over its last ten quarters.
Be prepared for volatility following the quarterly report; over the company’s last four EPS beats, shares have moved downwards three times by at least 14%.
Bottom Line
Roku (ROKU - Free Report) shares are the victim of one of the deeper valuation slashes we’ve seen over the last year. In addition, shares appear elevated in terms of valuation, and earnings are forecasted to shrink by a triple-digit percentage.
However, the company has consistently reported top and bottom-line results above expectations, and revenue is forecasted to register solid growth.
Heading into the quarterly report, Roku is currently a Zacks Rank #3 (Hold) with an Earnings ESP Score of -5%.