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JD.com (JD) to Report Q3 Earnings: What's in the Offing?

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JD.com, Inc. (JD - Free Report) is expected to report third-quarter 2018 results on Nov 12.

The company surpassed estimates only once in the trailing four quarters, recording average positive earnings surprise of 0.14%. Notably, the company reported a negative earnings surprise of 58.33% in the second-quarter 2018.

Shares of JD.com have lost 43.1% on a year-to-date basis against the industry’s rally of 1%.

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


E-Commerce Business to Aid Growth

In the second quarter, net revenues from online direct sales increased 29.4% from the prior-year quarter to RMB110.5 billion (US$16.7 billion). It accounted for 91% of the total second-quarter sales. The upsurge was driven by demand for home appliances, food and beverage, cosmetics, home furnishing and baby products.

The company continues to invest in order to expand its fulfillment capability and enhance product offerings. Further, its warehouses and robust transportation system are anticipatedto continue aidinggrowth to its e-commerce business.

Further, JD.com’s strong endeavors toward expanding footprint in the e-commerce markets outside China are major positives.The company continues to invest in relatively nascent and emerging markets. Additionally, the company’s partnership with Alphabet’s division Google is likely to continue bolstering presence in the international market.

All these factors are likely to drive the company’s third-quarter results.

Other Factors to Consider

The company’s growing advertising initiatives remain positives. Moreover, the well-performing text-driven advertising products are expected to aid the company’s advertising revenues in the to-be reported quarter.

Further, strengtheningsupply chain management system bodes well for the company’s logistics unit. However, sluggishness in the third party logistics services unit remains a concern.

Additionally, slowing home appliances market poses threat to the company’s online sales. Further, ongoing weakness in the smartphone market is a headwind. Further, macroeconomic headwinds in China are major negatives.

JD.com, Inc. Price and EPS Surprise

JD.com, Inc. Price and EPS Surprise | JD.com, Inc. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

JD.com has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of +37.50%. Such a combination makes surprise prediction difficult.

Stocks That Warrant a Look

Here are some stocks worth considering as our model shows that these have the right combination of elements to deliver anearnings beat in the upcoming releases.

Adobe Systems (ADBE - Free Report) has an Earnings ESP of +0.19% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Box (BOX - Free Report) has an Earnings ESP of +5.41% and a Zacks Rank #3.

Semtech Corporation (SMTC - Free Report) has an Earnings ESP of +1.64% and a Zacks Rank #3.

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