Shares of Wix.com Ltd. (WIX - Free Report) have been performing well of late. The company is a cloud-based web development platform.
If you haven't taken advantage of the share price appreciation yet, its time you hold the stock in your portfolio as it looks promising and is poised to carry the momentum ahead.
Wix.com's shares have returned 39.3% in the past year, substantially outperforming the industry's growth of 33.2%.
What's Going in Wix.com's Favor?
Q1 Results, Upbeat Guidance
Wix.com reported non-GAAP loss of 5 cents per share in the first-quarter of 2018, which was narrower than the Zacks Consensus Estimate loss of 11 cents. Moreover, the figure was also narrower than the year-ago loss of 18 cents per share.
Total revenues increased 49% year over year to $137.8 million, surpassing the Zacks Consensus Estimate of $135 million. Collections during the quarter came in at $159.7 million, surging 39% year over year.
The company also provided an encouraging guidance. For the second quarter, the company anticipates revenues in the range of $144-$145 million. The Zacks Consensus Estimate for revenues is pegged at $144.7 million.
The company updated fiscal 2018 guidance. Management now expects fiscal 2018 revenues in the range of $594-$597 million (up from the previous guidance of $591-$595 million). The Zacks Consensus Estimate for revenues is pegged at $596.7 million.
Collections are now projected to be in the range of $651-$657 million (up from the previous guidance of $645-$653 million).
Wix.comcontinues to add functionality to its platform, which is responsible for driving merchant base. Of late, demand for high-level customer engagement products and services are increasing. The company offers web development, design, solutions and apps via online platform that enables businesses, organizations, professionals and individuals to create digital presence. These tools help users to enhance digital presence. We believe there is a significant opportunity for the company to provide a cost-effective solution to aid the increasing demand of businesses, organizations, professionals and individuals in the digital market.
The estimates for global retail e-commerce sales by market research firm eMarketer (excluding travel, restaurant and event ticket sales) reached $2.304 trillion in 2017, accounting for 10.2% of total retail spending worldwide. This will further increase to $4.058 trillion by 2020, which will make up 14.6% of total retail spending. We believe that massive growth in e-commerce spending bodes well for Wix.com. The company’s cloud-based platform is well-positioned to address the growing needs of merchants at a time when social media, cloud computing, mobile devices and data analytics are transforming the e-commerce market place.
Mobile focus provides significant leverage to Wix.com. The company’s Wix App, a mobile application accessible on iOS and Android, enables users to create and manage content on their websites from a mobile device. We note that the company is benefiting from retail’s rapid transition to mobile and social sales channels. Per market research firm comScore, during 2017 holiday season (November-December), mobile commerce grew 44% from the year-ago period, with $17.1 billion spent through smartphones and tablets. Per eMarketer, M-commerce sales are projected to grow 32.7% in 2018. We believe that this rapid growth presents significant opportunities for the company in the long term.
Wix.com has a strong balance sheet with ample liquidity position and no debt obligations. Cash and short-term investments were $232.2 million as of Mar 31, 2018 which translates to around 65% of the total assets. Moreover, the company generated $24.8 million of cash flow from operational activities in the first quarter of 2018. The liquidity and cash flow reflects that the company is making investments in the right direction. Moreover, since it carries no long-term debt, thecash is available forpursuing strategic acquisitions, investment in growth initiatives and distribution to shareholders.
Meanwhile, increasing investments on product development, infrastructure and platform is a headwind. Further, lack of significant presence in the Asia-Pacific market and competition from peers add to its woes.
Zacks Rank and Key Picks
Wix.com carries a Zacks Rank #3 (Hold).
Better-ranked stocks from the broader technology sector are NVIDIA Corporation (NVDA - Free Report) , Micron Technology, Inc. (MU - Free Report) and NetApp, Inc. (NTAP - Free Report) , all carrying a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
NVIDIA, Micron and NetApp have a long-term earnings growth rate of 10.25%, 8.18% and 13.34%, respectively.
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