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E-commerce Stocks' Q3 Earnings Roster: AMZN, EXPE, MELI & W

Zacks Equity Research

E-commerce stocks quarterly releases are expected to reflect the growing proliferation of Internet usage globally.

Moreover, online retail and travel markets, which are pillars of growth for the e-commerce industry, are likely to have witnessed robust momentum in third-quarter 2019.

Sneak Peek on Q3 Earnings

We note that e-commerce forms a significant part of the Retail & Wholesale sector, which is one of the major contributing sectors in the S&P 500 index. Per the latest Earnings Preview, this sector’s earnings are expected to reflect a decline of 0.4% on a year-over-year basis.

E-commerce companies, especially online retailers, are facing stiff competition since traditional retailers have also launched online mode of operations. This is likely to have affected the third quarter results.

Further, foreign exchange headwinds and growing economic uncertainties are anticipated to get reflected in the industry participants’ quarterly performance.

Additionally, growing need for building advanced infrastructure such as strong delivery network, warehouses and fulfilment centers in order to deliver customer orders on time are expected to have negatively impacted the margins of these companies.

What’s in the Cards?

Nevertheless, smart technologies like AI, AR/VR, ML and deep learning, which aid e-commerce companies to offer a personalized user experience to customers, are likely to have positively impacted the performance of these companies this earnings season.

Emerging m-commerce and growing adoption of mobile apps are expected to have contributed to the financial results of the e-commerce companies during the third quarter.

Let’s see what’s in the offing for four such companies in this earnings season.

Amazon AMZN, which holds the dominant position in the e-commerce space owing to its aggressive retail strategies, is slated to report third-quarter results on Oct 24. The company’s strengthening delivery system is likely to have contributed to its online retail sales during the third quarter.

Further, solid Prime momentum, robust AWS services portfolio and expanding smart devices portfolio are expected to have positively impacted third-quarter results. (Read more: Will Amazon's (AMZN) Q3 Earnings Benefit From Prime & AWS?)

Notably, the Zacks Consensus Estimate for earnings has moved north by 1.1% over the past 30 days to $4.46.

However, rising costs related to free one day shipping service are expected to have affected Amazon’s third-quarter profits. Moreover, intensifying competition in both retail and cloud space is likely to get reflected in the third-quarter results.

Further, Amazon is unlikely to deliver a positive earnings surprise. This is because per the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of a positive earnings surprise.

Amazon has an Earnings ESP of +35.13% but carries a Zacks Rank #4 (Sell).

Amazon.com, Inc. Price and EPS Surprise

MercadoLibre MELI, which holds a leading position in the e-commerce space of Latin America, is set to report third-quarter results on Oct 31. Increasing adoption of the company’s MercadoPago, Mobile Wallet and e-commerce app are likely to have benefited the third-quarter top line.

However, MercadoLibre’s mounting expenses related to warehousing, free shipping subsidies and mPOS discounts are likely to have hurt margin expansion in the quarter under review. Further, unfavorable foreign exchange fluctuations are anticipated to get reflected in the third-quarter results.

This Zacks Rank #3 stock has an Earnings ESP of -200.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Moreover, the Zacks Consensus Estimate for earnings has moved south by 50% to 1 cent over the past 30 days.

MercadoLibre, Inc. Price and EPS Surprise

Wayfair W is set to report third-quarter results on Oct 31. The company’s quarterly results are anticipated to reflect benefits from its robust direct retail business.

Moreover, solid momentum of this particular business across the U.S. and international regions is anticipated to get reflected in the third-quarter performance. Further, strengthening house-brand offerings in U.K. and Germany are likely to have driven its top-line in the quarter under review.

Wayfair has an Earnings ESP of +0.36% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, the Zacks Consensus Estimate for a loss has been stable at $2.12 over the past 30 days.

Wayfair Inc. Price and EPS Surprise

Expedia Group EXPE is scheduled to report third-quarter results on Nov 6. Strength across Core OTA, Vrbo and Egencia is anticipated to get reflected in the company’s third-quarter results. Further, increasing stayed room nights and expanding global lodging portfolio are likely to have contributed to the top line during the quarter under review.

However, rising competition in the online travel space from Booking Holdings and MakeMyTrip among others is anticipated to have negatively impacted Expedia’s performance in the third quarter. Further, the third-quarter results are likely to reflect sluggishness in the trivago segment.

Expedia Group has an Earnings ESP of -0.41% and a Zacks Rank #4.

We note that the Zacks Consensus Estimate for earnings has been stable at $3.86 over the past 30 days.

Expedia Group, Inc. Price and EPS Surprise

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Click to get this free report Expedia Group, Inc. (EXPE) : Free Stock Analysis Report Wayfair Inc. (W) : Free Stock Analysis Report MercadoLibre, Inc. (MELI) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research