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Vipshop Holdings (VIPS) Q3 Earnings: What's in the Cards?

MMYT ASUR VIPS

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Vipshop Holdings Limited (VIPS - Free Report) is set to report third-quarter 2016 results on Nov 21 after the market closes. Last quarter, this China-based online lifestyle product retailer posted a negative earnings surprise of 7.14%.

In fact, the company has delivered negative surprises in three of the last four quarters, with in-line results in one. This translates to an average negative surprise of 4.92%.

VIPSHOP HOLDNGS Price, Consensus and EPS Surprise

 

VIPSHOP HOLDNGS Price, Consensus and EPS Surprise | VIPSHOP HOLDNGS Quote

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

Factors at Play

For the third quarter, Vipshop Holdings expects its total net revenue to increase in the range of approximately 37%−43% on a year-over-year basis. We note that the company has been delivering improved top-line results since the past few quarters amid a difficult macro-economic environment. The addition of new customers as well as younger and more Internet- and mobile-savvy shoppers to its customer base has fueled revenues.

Vipshop Holdings now expects to target these expanding demographics and offer products tailored for shoppers of various age groups. The company will also focus on delivering more personalized products and services to its customers.

However, the discounts offered by the company are expected to adversely impact margins. Further, the ongoing macroeconomic slowdown in China and increasing competition in the retail space are headwinds.

Earnings Whispers

Our proven model does not conclusively show that Vipshop Holdings is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for Vipshop Holdings is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 12 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Vipshop Holdings has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Stocks that have both a positive Earnings ESP and a favorable Zacks Rank, and are therefore worth considering include:

Asure Software, Inc. (ASUR - Free Report) , with an Earnings ESP of +12.5% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MakeMyTrip Limited (MMYT - Free Report) , with an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).

LinkedIn Corporation , with an Earnings ESP of +48.98% and a Zacks Rank #3 (Hold).

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