With the heart of earnings season less than a week away, investors are hoping first quarter earnings can reconcile some of their losses. Fourth quarter earnings were largely disappointing, with the names making a splash far and few between. This trend is likely to continue for a number of companies over the next few weeks.
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Using a combination of revisions activity, projected growth and historical beat rate, Estimize has compiled a list of potential winners and losers for Q1. Those likely to disappoint include GoPro, Yelp and Chevron. However, it won't be bad for everyone and ahead of earnings season, Facebook, Lending Tree and Alibaba are poised to top expectations.
Amongst the potential losers this quarter, GoPro kicks things off with first quarter earnings at the end of the month. Once a darling of Wall Street, GoPro's year long free fall has been widely documented. In the past 12 months, the stock plunged 73.8% despite a strong first half of 2015. GoPro has faced a slew of problems including weak Hero4 Session sales, continued volatility in China, relatively high operating expenses and the departure of several top executives.
Analysts are calling for earnings per share -$0.55 on $178.24 million in revenue, according to crowdsourced data.
Staying in technology, Yelp is likely to headline the list of underperformers this earnings season. Yelp is coming off a weak 2015 having missed on the bottom line in 3 of its last 4 reported quarters. Analysts are expecting first quarter per share earnings of -$0.14 on $156.22 million in revenue. Despite eclipsing 100 million customer reviews, sales have been limited by the number of local accounts Yelp has reached. Meanwhile, competitive threats from Google and Facebook are expected to put pressure on profits for the foreseeable future.
Moving to energy, Chevron is scheduled to report first quarter earnings soon after GoPro and Yelp. Chevron has fared slightly better than the two technology companies, but still has done nothing to raise investors spirits. In the past 12 months, the stock fell 8.91% while earnings continually got worse. Volatile oil prices have clearly played a large role in weak earnings, causing Chevron to slash its capital budget 36% over the next two years and increase its debt position. Fortunately, oil's recent rebound positions Chevron to bounce back sooner rather than later.
While a number of names are likely to disappoint this quarter, there are still some bright spots. Facebook has topped all expectations and appears to be on course to do so again. Last quarter Facebook surpassed estimates by a wide margin thanks in large part to a growing user base, increasing ad revenue and the benefit of profitable acquisitions such as WhatsApp and Instagram.
The crowd is bullish on Facebook's start to 2016, calling for earnings per share of $0.66 on $5.34 billion in revenue. With the debut of Oculus Rift in June and a slew of new products expected later this year, Facebook is poised to continue its long string of successes.
Meanwhile, financial technology upstart, Lending Tree, is proving that earnings season isn't just for the big boys. The small cap company perennially tops expectations, beating on both the top and bottom line for the last 4 consecutive quarters. The Fed's move to raise interest rates to start the year will likely give the lending company a nice boost heading into its first quarter earnings.
Analysts at Estimize are expecting earnings per share to reach $0.76 on revenues of $87.03 million.
Another expected winner this earnings season is Alibaba. The Amazon of China has been on the move since its public debut in late 2014. Last quarter the company again reported better than expected earnings, beating the crowd by 5 cents on EPS and by $240 million on sales. The company's dominance in China on top of continued efforts to develop new products and pursue acquisitions bodes well moving forward. Just this week, Alibaba purchased a controlling stake in Southeast Asian retailer, Lazada Group, in an effort to expand its presence outside of China.
The crowdsourced consensus is calling for earnings per share of $0.62 on 3.59 billion in revenue, reflecting a 27% increase on both the top and bottom line.
How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!