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Peek Into E-commerce Stocks' Q1 Earnings: AMZN, EBAY, EXPE

We are in the thick of the first-quarter earnings season, with more than 175 S&P 500 companies scheduled to post their financial numbers this week. By the end of next week, we will have seen Q1 results from more than 60% of the index members. 

Decent results till now have reinstated hopes that were dimmed by dull projections issued at the onset of the season. However, the earnings scenario for the overall Technology sector remains weak, with poor results from bellwethers like Google’s parent Alphabet GOOGL and Microsoft last week. For the Tech sector as a whole, we have Q1 results from 49.6% of its total market cap in the S&P 500 index. Total earnings for these Tech companies are down -6% on -1% lower revenues, with 72.2% beating EPS estimates and 50% beating revenue estimates.(Read more: Q1 Earnings Season Pattern Remains Intact)

E-commerce is one of the most important components of the technology sector. The online trend continues to gather steam as the younger generation is rapidly adapting to the advancing technology. Also, the improvements in the mobile device segment have led the online companies to deliver strong numbers.

Here, we take a sneak peek into three major e-commerce providers like eBay EBAY, Amazon AMZN and Expedia EXPE that are lined up to report earnings this week (Apr 25–29):

eBay, a leading online retailer, will report first-quarter 2016 results on April 26. For the quarter, eBay has an Earnings ESP of +0.00%. The company carries a Zacks Rank #3 (Hold). So, we can’t say for sure whether the company will beat estimates this time around. The Zacks Consensus Estimate is pegged at 39 cents.

Last quarter, the company recorded a positive earnings surprise of 6.98%. Notably, eBay outperformed the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive surprise of 9.30%.

eBay’s several initiatives including the collection of data from sellers, application of artificial intelligence for a better user experience, increased use of social media to drive traffic and focus on a discovery-based user experience will continue to drive revenues in the upcoming quarter.

However, the separation from PayPal (PYPL) will continue to hurt the company’s profits in the to-be-reported quarter. (Read more: What to Expect from eBay Inc this Earnings Season?)

Amazon, the world's largest Internet retailer, will report first-quarter 2016 results on April 28. For the quarter, Amazon has an Earnings ESP of +0.00%. It currently carries a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 60 cents.

Last quarter, the company recorded a negative earnings surprise of 37.89%. However, Amazon outperformed the Zacks Consensus Estimate in three out of the trailing four quarters, with an average positive surprise of 116.62%.

Amazon will continue to be the leading online retailer in the foreseeable future. The company’s success is its Prime membership program, solid growth of Amazon Web Services, its cloud service and expansion in the digital entertainment space with music, video and gaming will add to revenue growth in the upcoming quarter. However, despite the strong growth prospects in every area of its business, the company does need to make significant investments to deliver real profits. (Read more: Amazon 1Q Earnings Preview: Watch Out For Rising Costs)

Expedia, a leading online travel companies in the world, will report first-quarter 2016 results on April 28. The company has an Earnings ESP of 0.00% and it carries a Zacks Rank #3. The Zacks Consensus Estimate is pegged at a loss of 29 cents.

Last quarter, Expedia’s earnings missed the Zacks Consensus Estimate. Notably, the company missed the consensus mark in all the preceding four quarters, resulting in a negative average surprise of 97.20%. So going by the historical performance, its chances of a positive surprise are nil.

Expedia doesn’t have a good track record, so there is a certain amount of uncertainty in its near-term results. However, the company’s recent acquisitions to strengthen its domestic business and grow in some international markets could add to its top-line figures in the to-be-reported quarter. (Read more: Will Expedia Beat 1Q Earnings Estimates?)

Stay tuned! Check back later for our earnings coverage of these stocks.

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EXPEDIA INC (EXPE): Free Stock Analysis Report
 
AMAZON.COM INC (AMZN): Free Stock Analysis Report
 
EBAY INC (EBAY): Free Stock Analysis Report
 
ALPHABET INC-A (GOOGL): Free Stock Analysis Report
 
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