TripAdvisor Inc. TRIP is slated to report third-quarter 2015 results on Nov 5. In the last quarter, the company reported a 4.26% negative earnings surprise.
Let’s see how things are shaping up for this announcement.
Factors to Consider
TripAdvisor’s second-quarter earnings missed the Zacks Consensus Estimate due to higher sales and marketing costs as well as advertising expenses. Also, the adverse currency movements resulted in weaker-than-expected sales growth. These factors are likely to impact third-quarter results as well.
The company’s solid fundamentals, various growth initiatives including Instant Booking, strong focus on developing its mobile products, expansion into international restaurant reservation and improvement in user growth and engagement, especially on mobile devices, are expected to aid third-quarter results. Strength in both click-based and display-based advertising businesses drove solid revenues in the second quarter.
However, intensifying competition from Priceline, Expedia and Alphabet could hurt results in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that TripAdvisor will beat 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 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 47 cents. Hence, the difference is 0.00%.
Zacks Rank: TripAdvisor’s Zacks Rank is #4 (Sell).
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 want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Facebook, Inc. FB, with an Earnings ESP of +5.71% and a Zacks Rank #1.
AmSurg Corp. AMSG, with an Earnings ESP of +8.79% and a Zacks Rank #1.
Intra-Cellular Therapies, Inc. ITCI, with an Earnings ESP of +10.61% and a Zacks Rank #1.
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