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JD.com (JD) to Report Q4 Earnings: What's in the Offing?

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JD.com, Inc. JD is slated to report fourth-quarter 2019 results on Mar 2.

For fourth-quarter 2019, the company expects net revenues between RMB 163 billion and RMB 168 billion, suggesting growth of 21-25% from the prior-year quarter. The Zacks Consensus Estimate for revenues is pegged at $23.81 billion, indicating an improvement of 21.4% from the year-ago reported figure.

Moreover, the consensus mark for earnings is pegged at 7 cents per share, flat with the year-ago reported figure.

The company has beat estimates in the trailing four quarters by 189.16%, on average.

JD.com, Inc. Price and EPS Surprise

JD.com, Inc. Price and EPS Surprise

JD.com, Inc. price-eps-surprise | JD.com, Inc. Quote

Factors to Consider

JD.com’s strong efforts toward offering services at best price on the back of its scale and lower procurement costs from suppliers are expected to have benefited the fourth-quarter performance.

Moreover, direct sales model, which is based on best price model, is likely to have driven the company’s operating performance in the quarter under review.

Further, the company’s JD Retail segment that comprises of e-commerce business is expected to have acted as a key catalyst in the fourth quarter owing to strengthening momentum across lower-tier cities.

Growing initiatives to deliver enhanced customer experience are anticipated to have aided the company in gaining further traction among middle-class customers in lower-tier cities during the to-be-reported quarter.

This, in turn, is expected to have bolstered the company’s customer base, which is likely to have accelerated purchase order number and growth in gross merchandise volume (GMV) during the fourth quarter.

Further, the company’s new social e-commerce platform, Jingxi, offers quality goods and services at attractive prices and has tie-ups with domestic manufacturers. The platform is likely to have accelerated the company’s penetration into lower-tier cities during the fourth quarter.

Additionally, increasing demand for food and beverage, cosmetics, home furnishing and especially electronics and home appliances is likely to have contributed to online direct sales of JD.com in the to-be-reported quarter.

The company also leverages data-based customer insights on its e-commerce platform. This along with the growing number of flagship stores of international brands on its platform are expected to have acted as a tailwind.

Further, the company’s deepening focus on bolstering e-commerce presence in international markets and ongoing investments in emerging markets are likely to have aided the performance of JD Retail in the fourth quarter.

Apart from the retail segment, the company’s growing momentum across New Businesses segment, which comprises of logistics services, technology services and overseas businesses, is also expected to get reflected in the fourth-quarter results.

However, macroeconomic headwinds in China and mounting investment costs are likely to have weighed on the fourth-quarter performance.

Additionally, rising competitive pressure in the e-commerce market from Alibaba (BABA) and other players are expected to have impacted the company’s fourth-quarter margins thanks to rising marketing expenses.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for JD.com this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

JD.com has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).

Stocks to Consider

Here are a few stocks that you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Benefitfocus, Inc (BNFT - Free Report) has an Earnings ESP of +35.48% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Guidewire Software, Inc. (GWRE - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #2.

Marvel Technology Group Ltd. MRVL has an Earnings ESP of +5.7% and a Zacks Rank #3.

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