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Vipshop (VIPS) to Report Q1 Earnings: What's in the Offing?

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Vipshop Holdings Limited (VIPS - Free Report) is set to report first-quarter 2020 results on May 27. In the last reported quarter, the company delivered a positive earnings surprise of 41.4%.

For the first quarter, it expects total net revenues between RMB 17.1 billion and RMB 18.1 billion, indicating a decline of 15-20% from the prior-year quarter.

The Zacks Consensus Estimate for revenues is pegged at $2.50 billion, suggesting a decline of 21.3% from the year-ago reported figure.

Further, the consensus mark for earnings per share is pegged at 9 cents per share, which indicates a decline of 50% year over year.

The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 32.5%.

Vipshop Holdings Limited Price and EPS Surprise

 

Factors at Play

Due the global coronavirus-driven economic crisis, Vipshop’s first-quarter sales might have been affected. The company’s apparel category, which has been impacted by coronavirus-induced lockdown, witnessed a decrease in demand.

Nevertheless, its persistent efforts toward strengthening product offerings and improving product procurement are likely to reflect on first-quarter results, given the secular trend in the online shopping market. Further, solid execution of Vipshop’s merchandising strategy is likely to have bolstered total active customer base in the to-be-reported quarter.

Moreover, its successful transition to discount retailing might have been a major positive. This is likely to have driven momentum across repeat customers and helped in attracting new ones.

The strategic acquisition of Shan Shan that operates five outlets in Ningbo, Taiyuan, Harbin, Zhengzhou and Nanchang is expected to have contributed to GMV growth in the first quarter.

However, intensifying competition in the online shopping market, which resulted in an increase in sales and marketing spending, is likely to get reflected in the company’s first-quarter results.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Vipshop 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.

Vipshop has an Earnings ESP of 0.00% and a Zacks Rank #2.

Stocks to Consider

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

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify Inc. (SHOP - Free Report) has an Earnings ESP of +33.18% and a Zacks Rank #2.

CrowdStrike Holdings Inc. (CRWD - Free Report) has an Earnings ESP of +3.57% and holds a Zacks Rank of 2.

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