IPO class of 2015 seek to ace earnings season

Trevir Nath, director of content
Key Points

Victor J. Blue | Bloomberg | Getty Images

After a six-month dry spell, two unicorns — Twilio and Line — finally decided to test the public market. The results have been mixed, with Twilio soaring to new heights and Line struggling to attract investors.

But don't expect the IPO parade to start just yet. Companies are now, more than ever, taking a lesson from past indiscretions and choosing to stay private longer. The class of 2015 is a prime example of a group of companies that prematurely went public and have suffered the consequences. The list includes Etsy, Fitbit, GoDaddy and Party City. Each of these names report earnings this week with hopes of turning around past misfortunes.

Etsy and Fitbit kick things off on Tuesday with their scheduled second quarter reports.

Etsy has made serious headway at reigniting growth. Last quarter, the Brooklyn-based online marketplace turned a profit for the first time since its public endeavor. Etsy is slowly establishing itself as the preeminent marketplace for handcrafted items. More than 90 percent of its traffic is organic, meaning Etsy doesn't pay for it and consumers are aware of its value.

In early trading today, Etsy shares spiked nearly 12 percent after Citi raised the company to a "buy" rating. The note put a $14 price target on the stock, citing steady margin expansion to support its claim.

Shares of the company are up 44 percent this year, but have still declined nearly 43 percent from a year earlier.

The Estimize community has raised its earnings target in light of Etsy's turnaround. Analysts are calling for a loss of 1 cent per share, 80 percent higher than the same period last year. This estimate has increased 27 percent since Etsy's last report in May. Revenue is anticipated to increase about 35 percent to $83.78 million, marking a slowdown in revenue growth from the previous quarter.

Fitbit, on the other hand, has been one of the most beaten up companies in the past year. Shares are down 53 percent year to date and almost 71 percent in the past 12 months.

Its troubles have only increased as more competition emerges in the wearables space. Major players in the industry include Apple, Garmin, Samsung, and Under Armour. As a result, the pace of sales growth slowed down considerably over the past year. The downward trend is expected to continue when Fitbit reports tomorrow.

Analysts are calling for earnings per share of 13 cents on $589.25 million in revenue, according to crowdsourced consensus data. Per share estimates have been cut by 57 percent since Fitbit's last report in May. Compared to a year earlier, this represents a 36-percent decline on the bottom line and 47-percent increase on the top.

Unlike the aforementioned companies, GoDaddy's misfortunes haven't been too costly for shareholders. Shares of the web hosting company are down 8.4 percent year to date, a small amount when compared to Fitbit's losses.

The company's focus on delivering innovative and increasingly personalized products and services has begun to bear fruit. GoDaddy is growing its international presence, particularly in Asian markets, with a concentration on small business offerings. It's expected that the shift will play an important role going forward and open up a new avenue of revenue.

GoDaddy also recently launched a new app that lets aspiring entrepreneurs test business ideas. It allows users to get their prospective ideas in front of people and gather feedback before ultimately acting on them. The company still faces a number of near-term threats that could impact earnings, including stiffer competition and a heavy debt burden.

Analyst are looking for a loss of 8 cents per share on $451.28 million in revenue, according to the crowd. Compared to the previous year this represents a 55-percent increase on the bottom line and 14 percent on the top. Estimates have trended upwards in the past three months as the market gains more confidence in GoDaddy's ability to turn a profit.

Capping off the week is Party City. The company's financial performance has been difficult to pin down since its IPO last year. Revenue has been flat for nearly a year while earnings growth has teetered between negative and positive. Shares are up nearly 21 percent since the start of the year but are still down 24 percent in the past 12 months.

First quarter results were generally in line with expectations. Same store sales dropped 1.5 percent while retail sales rose by 2.6 percent, thanks to the addition of 38 new stores in the past year. Frozen merchandise was a key driver of strong comparables, as is true for any company that promotes the Disney hit.

The recent acquisition of costume manufacturer, Festival, will help fuel Party City's international expansion plans. In May, the company opened its first store in Mexico with a second location scheduled to open in the next month. International expansion is a new layer of potential growth that the company hopes will stoke stagnant sales.

Analysts are looking for earnings per share of 19 cents on $520.36 million in revenue, according to crowdsourced consensus data. Compared to a year earlier this represents a 60 percent jump on the bottom line and 5 percent on the top.

All bets are off when these companies report this week. Whileearly signs point to a number of beats, a small miss or weak future guidancecould send these stocks plummeting.

How do you think these names will report? Be included in theEstimize consensus by contributing your estimates here!