Liberty Interactive Corporation is slated to report first-quarter 2017 results on May 9, before the opening bell.

In the last reported fourth quarter of 2016, Liberty Interactive delivered a negative earnings surprise of 3.39%. The company’s performance in certain metrics – net income, total revenue and operating income – were disappointing. Based on last quarter’s below-par performance, we can expect the trend to continue in the to-be reported quarter.

However, the company’s earnings outpaced the Zacks Consensus Estimate in two of the previous four quarters, the average beat being 20.00%.

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

Factors at Play

Liberty Interactive’s businesses are susceptible to rapid technological changes, which increase the company’s expenses. The company continues to face headwinds such as global economic crisis, foreign exchange risks and market competition. Increased exposure to international markets aggravates foreign exchange risks for the company. Liberty Interactive competes with large online sellers like Amazon.com Inc. (AMZN Quick QuoteAMZN - Free Report) , HSN Inc. and Alibaba Group Holding Ltd. (BABA Quick QuoteBABA - Free Report) .

Amid such troubles, the stock has returned 11.9%, outshining the Zacks categorized Retail - Mail Order & Direct industry’s gain of 10.4%, over the past three months.

Liberty Interactive’s QVC division is benefiting from the surge in online sales. A major thrust is expected to come from the growing demand for high-end smartphones in the U.S. QVC is the second-largest e-commerce retailer in the U.S. after Amazon.com Inc. The interactive division is expanding its presence in developed international markets such as Japan, Germany, Italy, and the U.K., which will lead to a high growth rate. Liberty Interactive is  optimistic about its operations in China.

Earnings Whispers

Our proven model does not conclusively show that Liberty Interactive Corporation is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Liberty Interactive Corporation has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 34 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.

Zacks Rank: Liberty Interactive Corporation has a Zacks Rank #4 (Sell).

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

Key Pick

Here is a company from the Zacks categorized broader Retail and Wholesale sector – which houses Liberty interactive Corporation– that has the components to post an earnings beat this quarter.

Wal-Mart Stores, Inc. (WMT Quick QuoteWMT - Free Report) is expected to report first-quarter 2018 results on May 18. It has an Earnings ESP of +2.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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