Liberty Interactive Corp. QVCA is slated to release its second-quarter 2015 results before the market opens on Aug 5.
Last quarter, Liberty Interactive delivered a positive earnings surprise of 40.91%. Moreover, the company’s earnings have surpassed the Zacks Consensus Estimate in two of the prior four quarters, with an average beat of 5.54%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Liberty Interactive’s QVC division is the second largest e-commerce retailer in the U.S. after Amazon.com Inc. AMZN. The segment is poised to benefit from the surge in online sales with a major thrust expected from the growing adoption of high-end smartphones in the U.S. In addition, exposure to international markets, such as Japan, Germany, Italy, and the U.K., should further boost the quarter’s performance and enable QVC to achieve a higher growth rate.
On the flip side, mounting TV carriage costs may continue to hurt the company’s margins. Further, persistent global economic headwinds, foreign currency exchange risks and intensifying competition may weigh on the to-be-reported quarter’s performance.
Earnings Whispers
Our proven model does not conclusively show that Liberty Interactive is likely to beat the Zacks Consensus Estimate this quarter. This 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. Unfortunately, that is not the case here as elaborated below:
Zacks ESP: Liberty Interactive has an earnings ESP of -4.17%. This is because the Most Accurate estimate stands at 23 cents while the Zacks Consensus Estimate is pegged higher at 24 cents.
Zacks Rank: Liberty Interactive has a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.
Note that, 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 you may want to consider instead, as our model shows these have the right combination of elements to post an earnings beat this quarter:
L Brands, Inc. LB, which has an earnings ESP of +2.99% and a Zacks Rank #3.
The Walt Disney Company DIS, which has an earnings ESP of +2.16% and a Zacks Rank #3.
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