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After Wayfair's Earnings Miss, Buy These E-Commerce Stocks Instead

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Shares of Wayfair (W - Free Report) were down more than 17% in early morning trading Thursday after the e-commerce company posted a wider-than-expected fourth-quarter loss.

The online home goods retailer reported a non-GAAP loss of $0.58 per share, missing the Zacks Consensus Estimate of a $0.51 per share loss. On a GAAP basis, net loss totaled $72.8 million, up from a loss of $44.0 million in the year-ago quarter.

Despite that disappointing earnings result, Wayfair’s report did have some bright spots. The company’s fourth-quarter revenues expanded about 46.2% on a year-over-year basis to touch $1.44 billion, outpacing our consensus estimate of $1.36 billion. Meanwhile, active customers increased 33.2% to reach 11 million, and average order value grew to $229 from $203 in the year-ago period.

“Our long-term investing approach and customer-centric mentality continue to pay off as we outpace the shift to online spending in our category and gain significant market share,” said CEO Niraj Shah. “Technology, combined with continuous testing and innovation, allows us to constantly enhance the shopping experience while quickly scaling our operations.”

Wayfair certainly seems to have a solid foundation to its business, with today’s earnings miss simply underscoring the immense costs associated with carving out one’s own market in today’s competitive e-commerce industry.

Shares of Wayfair are still up more than 90% over the past year, and the stock’s post-earnings losses may very well present a unique opportunity to buy on the dip. But for investors who would rather focus on e-commerce stocks that have recently posted positive earnings surprises, there are plenty of options elsewhere.

1.       PetMed Express, Inc. (PETS - Free Report)

PetMed Express operates through 1-800-PetMeds, an online retailer that sells drugs for pets in its digital pharmacy. In its latest quarterly report last month, PETS posted adjusted earnings of $0.44 per share, crushing the Zacks Consensus Estimate of $0.33 per share. The company also reported total revenues of $60 million, surpassing our consensus estimate of $58 million and expanding from the $53 million witnessed in the prior-year period.

PetMed’s earnings estimates have been moving consistently higher in the wake of its report, with our consensus mark for the current fiscal year gaining six cents in just the past week and the upcoming fiscal year’s consensus moving 20 cents higher over that time. PETS is now sporting a Zacks Rank #1 (Strong Buy).

 

2.       JD.com, Inc. (JD - Free Report)

JD.com is one of China’s largest e-commerce companies—and perhaps its most popular direct-to-consumer online shopping platform. The stock is currently holding a Zacks Rank #2 (Buy), as well as an “A” grade for Growth in our Style Scores system. The company will report its Q4 results in two weeks, and full-year earnings growth is expected to finish at over 400%.

JD also has an impressive earnings surprise history, surpassing our Zacks Consensus Estimate for earnings in each of the trailing six quarters—including a 130% beat in the previous fiscal period. The Chinese e-commerce behemoth has also outpaced our consensus revenue estimates in each of those quarters, posting consistently-impressive year-over-year growth over that stretch.

 

3.       Shutterfly, Inc.

Shutterfly is an Internet-based social expression and personal publishing service that delivers high-quality photo books, holiday cars, and assorted gifts. In its ever-important holiday quarter, Shutterfly tallied earnings of $3.11 per share, beating the Zacks Consensus Estimate of $2.91. The company has now outperformed our consensus estimate for earnings in four-consecutive quarters.

SFLY is currently sporting a Zacks Rank #1 (Strong Buy) and an “A” grade for Growth. We have seen a number of estimate revisions for its full-year and next-year earnings, with 100% agreement to the upside for both periods. The company is now projected to witness EPS growth of 99% in fiscal 2018. Shutterfly is also making noise with its recent acquisition of Lifetouch, a yearbook and school photos company.

 

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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