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E-Commerce Stocks Q1 Earnings Due on May 3: IAC, GRPN & STMP

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The first-quarter earnings season has gathered pace, with results from 288 S&P 500 members or 63.8% of the index’s total market capitalization already out (as of Apr 28).

Per the latest Earnings Preview, total earnings of these index members are up 13.7% year over year on the back of 8.2% higher revenues. Beat ratios are impressive with 76.4% beating earnings estimates and 68.1% coming ahead of revenue expectations.

Technology Sector

Investors seem to be rejoicing as most of the companies in the technology sector surpassed their estimates last week, particularly revenue estimates, for the first quarter. Also, growth rate is up from the preceding quarter and is on track to reach its highest level in almost three years. Continuation of these trends through the rest of this earnings season should serve as a reassuring development for the market.

As per the report, 30 of the technology sector’s 62 companies in the S&P 500 index have reported their earnings. Total earnings of these 30 companies, which account for 57.4% of the sector’s total market cap in the index, are up 17.7% from the same period last year on 6.2% higher revenues, with 80% beating earnings estimates and 73.3% surpassing revenue expectations.

E-commerce is one of the most important components of the technology sector. The online trend continues to gather steam as the younger generation is rapidly adopting fast-advancing technology. Also, improvements in the mobile device segment have led the online companies to deliver strong numbers.

Among the e-commerce providers slated to report quarterly earnings on May 3, let’s see what’s ahead for these three.

IAC/InterActiveCorp (IAC - Free Report) , a leading media and Internet company, is slated to release first-quarter 2017 results.

According to our model, a company needs to have the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase the odds of an earnings surprise.

The Earnings ESP for IAC/InterActiveCorp is +33.33%. This is because the Most Accurate estimate stands at 16 cents while the Zacks Consensus Estimate is pegged at 12 cents. The company has a Zacks Rank #3, which increases the predictive power of ESP. Therefore, we are reasonably confident of IAC/InterActiveCorp delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Notably, IAC/InterActiveCorp surpassed the Zacks Consensus Estimate twice, while missing estimates on the other two occasions in the trailing four quarters. It has an average four-quarter positive surprise of 7.32%.

IAC/InterActiveCorp Price and EPS Surprise

 

IAC/InterActiveCorp Price and EPS Surprise | IAC/InterActiveCorp Quote

However, Groupon, Inc. (GRPN - Free Report) is unlikely to post an earnings beat when it reports first-quarter 2017 results. Groupon operates a shopping website, which offers goods and services at a discount in North America and in international markets.

This is because the company has a Zacks Rank #3 and an Earnings ESP of 0.00%. Though Zacks Rank #3 or better increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

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

Notably, the surprise history has been good in Groupon’s case. The company surpassed the Zacks Consensus Estimate in all the preceding four quarters, with an average positive surprise of 78.57%.

Groupon, Inc. Price and EPS Surprise

 

Groupon, Inc. Price and EPS Surprise | Groupon, Inc. Quote

We also don’t expect Stamps.com Inc. , an Internet-based mailing and shipping services provider, to post an earnings beat when it reports first-quarter 2017 results.

This is because the company has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank  stocks here.

Notably, Stamps.com’s results surpassed the Zacks Consensus Estimate in all the preceding four quarters. It has an average four-quarter positive surprise of 66.24%.

Stamps.com Inc. Price and EPS Surprise

 

Stamps.com Inc. Price and EPS Surprise | Stamps.com Inc. Quote

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