JD.com JD is slated to report second-quarter 2015 results on Aug 7. Let’s see how things are shaping up for this announcement.
Factors to Consider
JD.com consistently invests to boost long-term growth, increase brandawareness, broaden product offerings, enhance services offered to sellers on its marketplace platform and expand fulfillment capability. These should strengthen the company’s position and drive results in the to-be-reported quarter.
Furthermore, alliances with key international brands like eBay will expand its reach in foreign markets and increase consumer base.
The strategic investment in tunui.com is a perfect fit for leveraging its middle class customer base for cross selling on JD.com's platform. Leisure travel is still an up-and-coming trend in China and the cultural differences and language barrier will make planned tours an ideal choice for mass consumers looking to travel abroad. Tunui and JD.com are best positioned to take advantage of this trend.
JD.com’s GMV also witnessed stable growth with marketplace, Weixin and Mobile QQ entry points, general merchandize categories, apparel and shoes, home furnishing, watches and handbags, cosmetics and auto-related products being the growth drivers.
Management expects second-quarter net revenue growth between 52% and 56% on a year-over-year basis. As for non-GAAP bottom line, the company maintained previous guidance of breakeven to negative 0.5% for full-year 2015.
Earnings Whispers
Our proven model does not conclusively show that JD.com will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP:Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 9 cents. Hence, the difference is 0.00%.
Zacks Rank:JD’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies which you may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Jack in the Box JACK, with an Earnings ESP of +2.74% and a Zacks Rank #1.
ZAGG Inc ZAGG, with an Earnings ESP of +12.50% and a Zacks Rank #2.
Sprint Corporation S, with an Earnings ESP of +45.45% and a Zacks Rank #3.
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