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Wayfair Inc. (W) Disappoints in Q2 Earnings, Stock Plunges 17%
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Shares of Wayfair Inc. (W - Free Report) are down 16.9% in midday trading on Tuesday after posting Q2 losses that were larger than expected.
The Boston, MA based company operates in the e-commerce space and offers various types of home furniture. Wayfair posted earnings before market open on Tuesday, in which it reported revenue of $787 million and a GAAP basic and diluted net loss of $0.57 per share.
These values narrowly edged out the Zacks Consensus Estimates of $785 million in revenue and a loss of $0.58 per share. However, the company missed street EPS expectations, posting a non-GAAP diluted net loss per share of $0.43, two cents below street estimates.
Earnings values aside, the company saw a 71.6% year-over-year increase in direct retail revenue, along with a 60% year-over-year increase in total net revenue. CEO, co-founder and chairman Niraj Shah stated that “We are achieving strong momentum across the business as Wayfair continues to take between a third and forty percent of the online dollar growth in our categories in the U.S.”
Wayfair saw a 65% year-over-year increase in active customers and a 0.03 average increase to 1.70 in orders per customer. The big drop could potentially be attributed to the run that the stock had coming into earnings. Between July 27 and August 8, Wayfair had seen an $8 (or nearly 20%) increase to $48.25 per share.
Tuesday’s plunge brings Wayfair back to values from before the aforementioned run, signaling that based on earnings results, the stock was overvalued at its current price.
Wayfair has not seen any earnings estimate revisions in the last 60 days, but this could change in the days following its earnings report. Q3 estimate stand at a loss of $0.41 per share, while full year estimates stand at a loss of $1.72 per share.
Although Wayfair is seeing a growing clientele, its margin rates are becoming worse, with a current EBITDA margin rate of -3.2% compared to -1% a year ago. This is due mainly to the company’s initiatives to expand and optimize their warehousing, transportation and logistics infrastructure. If the company cannot use these investments to pull in strong earnings results, it could be in trouble moving forward.
Wayfair Inc. currently sits at a Zacks Rank #3 (Hold), although this could be subject to change in the days to come.
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Wayfair Inc. (W) Disappoints in Q2 Earnings, Stock Plunges 17%
Shares of Wayfair Inc. (W - Free Report) are down 16.9% in midday trading on Tuesday after posting Q2 losses that were larger than expected.
The Boston, MA based company operates in the e-commerce space and offers various types of home furniture. Wayfair posted earnings before market open on Tuesday, in which it reported revenue of $787 million and a GAAP basic and diluted net loss of $0.57 per share.
These values narrowly edged out the Zacks Consensus Estimates of $785 million in revenue and a loss of $0.58 per share. However, the company missed street EPS expectations, posting a non-GAAP diluted net loss per share of $0.43, two cents below street estimates.
Earnings values aside, the company saw a 71.6% year-over-year increase in direct retail revenue, along with a 60% year-over-year increase in total net revenue. CEO, co-founder and chairman Niraj Shah stated that “We are achieving strong momentum across the business as Wayfair continues to take between a third and forty percent of the online dollar growth in our categories in the U.S.”
Wayfair saw a 65% year-over-year increase in active customers and a 0.03 average increase to 1.70 in orders per customer. The big drop could potentially be attributed to the run that the stock had coming into earnings. Between July 27 and August 8, Wayfair had seen an $8 (or nearly 20%) increase to $48.25 per share.
Tuesday’s plunge brings Wayfair back to values from before the aforementioned run, signaling that based on earnings results, the stock was overvalued at its current price.
Wayfair has not seen any earnings estimate revisions in the last 60 days, but this could change in the days following its earnings report. Q3 estimate stand at a loss of $0.41 per share, while full year estimates stand at a loss of $1.72 per share.
Although Wayfair is seeing a growing clientele, its margin rates are becoming worse, with a current EBITDA margin rate of -3.2% compared to -1% a year ago. This is due mainly to the company’s initiatives to expand and optimize their warehousing, transportation and logistics infrastructure. If the company cannot use these investments to pull in strong earnings results, it could be in trouble moving forward.
Wayfair Inc. currently sits at a Zacks Rank #3 (Hold), although this could be subject to change in the days to come.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>