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What Lies in Store for SINA Corp (SINA) in Q1 Earnings?

SINA Corporation SINA is set to report first-quarter 2017 results on May 16. Last quarter, earnings of 27 cents was  in line with the Zacks Consensus Estimate. Notably, the company has a mixed earnings surprises track for the trailing four quarters, with an average positive surprise of 368.75%.

Let’s see how things are shaping up for this announcement.

Factors at Play

SINA has a strong product pipeline and is investing in product development and marketing. The company’s robust user base for its e-commerce and Weibo offerings are positives.

We believe that SINA will benefit from the growth potential of e-commerce, e-banking, online payment and online entertainment services markets in China.

Sina Corporation Price and EPS Surprise

Sina Corporation Price and EPS Surprise | Sina Corporation Quote

Further, the booming gaming market in China is also a positive for the company. Shares of SINA have outperformed the Zacks categorized Internet Content industry. On a year-to-date basis shares of SINA have increased 35.2% compared with the industry's gain of 22%.

We believe that Weibo’s monetization ability will be a major driving factor for SINA amid intensifying competition from the likes of Inc. SOHU and NetEase NTES in the video and brand advertising market.

However, the company’s business is likely to be impacted by soft macroeconomic conditions in China. Also, significant restrictions on online search and other social-networking activities in the region remain concerns.

Earnings Whispers

Our proven model does not conclusively show that SINA is likely to beat earnings 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. That is not the case here as you will see below.

Zacks ESP: SINA has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 28 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: SINA has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here’s a stock that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release.

Applied Materials AMAT with an Earnings ESP of +1.32% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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