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YY Gears Up to Report Q3 Earnings: What's in the Cards?

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YY, Inc. (YY - Free Report) is set to report third-quarter 2019 results on Nov 12.

The Zacks Consensus Estimate for third-quarter earnings has been steady at 75 cents over the past seven days.

For the third quarter of 2019, YY expects revenues between RMB 6.57 billion and RMB 6.77 billion, indicating growth of 60.2-65.1% from the year-ago period reported figure.

The consensus mark for revenues is currently pegged at $949.5 million, which implies growth of 59% from the figure reported in the year-ago quarter.

The company missed the Zacks Consensus Estimate in two of the trailing four quarters, delivering an average negative surprise of 4.1%.

In the last reported quarter, YY reported adjusted earnings of 75 cents per American depositary shares, which missed the Zacks Consensus Estimate by 17 cents.

Net revenues increased 66.8% to RMB 6.29 billion ($917 million) from the year-ago quarter.

Let’s see how things have shaped up prior to this announcement.

YY Inc. Price and EPS Surprise

YY Inc. Price and EPS Surprise

YY Inc. price-eps-surprise | YY Inc. Quote

Key Factors to Consider

YY made significant progress on multiple fronts in the third quarter. It made Likee (YY’s video creation and sharing platform) short-term video content available on its instant messaging platform, IMO. This is likely to have converted a major portion of its IMO users into short-form video users.

Notably, Likee’s monthly average user count increased exponentially in the second quarter and this momentum is expected to have continued in the to-be-reported quarter.

Additionally, the introduction of other services like group chats, mini games and live streaming is likely to have helped in improving loyalty and attracting users to the instant messaging service.

Moreover, on the monetization front, there has been an encouraging trend in IMO’s advertising business, which is expected to have aided top-line growth.

Furthermore, YY continued to fortify its live streaming leadership in the developed world through BIGO Live. As a result, revenues generated in developed markets are expected to have increased.

HAGO’s (game oriented social media platform) user base is expected to have grown rapidly with the addition of game titles and social features like chat rooms and karaoke. As a result, the average user time spent on a daily basis is expected to have increased.

What Our Model Says

According to the Zacks model, the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP increases the odds of an earnings beat.

YY has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Twin River Worldwide Holdings, Inc. (TRWH - Free Report) has an Earnings ESP of +13.25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Spectrum Brands Holdings Inc. (SPB - Free Report) has an Earnings ESP of +2.60% and a Zacks Rank #3.

International Game Technology (IGT - Free Report) has an Earnings ESP of + 20.00% and a Zacks Rank #3.   

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