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Will Innovative Products Aid Fitbit's (FIT) Q2 Earnings?

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Fitbit Inc. (FIT - Free Report) is set to report second-quarter 2018 results on Aug 1. Notably, it surpassed the Zacks Consensus Estimate in three out of the trailing four quarters, recording an average positive surprise of 42.78%.

Fitbit’s strong portfolio and focus on diversification in the healthcare sector should aid second-quarter results. However, increasing competition in the fitness wearable category is a concern.

The company's shares have gained 11.4% in the past 12 months, underperforming the industry’s rally of 37.7%.

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

Growth Drivers

The company has been introducing new products to increase revenue base. Yet, these products are unable to drive enough revenues for the company. However, its efforts to further diversify business, and focus on health and wellness could help the company drive revenues in the near future. Just recently, it came up with its first wearable for children, namely Fitbit Ace. This device is aimed at children of eight years and older.

Technology firm Fitbit is undertaking other initiatives that are expected to pull out the company from slow growth. These steps include offering a streamlined set of products, improving software and services to offer more personalization to customers, and achieving greater integration into the healthcare ecosystem.

These efforts might help to drive Fitbit’s second-quarter results.

Increasing Competition a Concern

Fitbit, which became a prominent name for its simple fitness wearables, has been hurt by massive competition in the market. It faces competition in both the high and low-end product range. On the high-end front, it competes with Apple Watch. On the lower end, fitness-tracking devices from Jawbone, Garmin Ltd. and Xiaomi also pose tough competition.

Outlook

For the second quarter of 2018, Fitbit expects revenues in the range of $275-$295 million. The Zacks Consensus Estimate is pegged at $285.9 million.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Fitbit has a Zacks Rank #3 but an Earnings ESP of -5.49%, which does not indicate a likely positive earnings surprise. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Fitbit, Inc. Price and EPS Surprise

 

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

Stocks to Consider

Here are some stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Groupon, Inc. (GRPN - Free Report) has an Earnings ESP of +59.68 and sports a Zacks Rank #1.

AMETEK (AME - Free Report) has an Earnings ESP of +0.43% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies (A - Free Report) has an Earnings ESP of +0.88% and a Zacks Rank #3.

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