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Factors to Consider Ahead of Autohome's (ATHM) Q2 Earnings

Zacks Equity Research

Autohome Inc. ATHM is scheduled to report second-quarter 2019 results on Aug 7.

The company surpassed the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average positive earnings surprise of 9.3%.

Q1 at a Glance

Autohome had reported first-quarter 2019 non-GAAP earnings of 87 cents per share which beat the Zacks Consensus Estimate by 8.8%.

Revenues of $240.2 million surpassed the Zacks Consensus Estimate of $237 million. The figure was also higher than the year-ago quarter’s revenues of approximately $205 million.

What to Expect in Q2

Autohome projects second-quarter revenues in the range of $339 million to $343.5 million. The Zacks Consensus Estimate for revenues stands at $331.54 million, suggesting growth of 17.4% from the year-ago reported figure.

The Zacks Consensus Estimate for second-quarter earnings declined 3.7% over the past 30 days to $1.03 per share. Nonetheless, the figure indicates an improvement of 8.4% from the year-ago reported figure.

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

Factors Likely to Influence Q2 Results

Autohome’s second-quarter results are expected to benefit from strength in its diversified product portfolio and solid media business amid weakness in automobile market and lingering macroeconomic woes.

Robust volume growth in traffic and initiatives to expand lead generation business are likely to drive the to-be-reported quarter’s top line. Moreover, incremental adoption of recently launched Carso, an intelligent search engine, is expected to enable Autohome in bolstering traffic growth.

Further, growing demand for used cars and vehicles sales leads in the marketplace and continued cost cutting measures from the company’s end is expected to positively impact the to-be-reported quarter results.
 

Autohome Inc. Price and EPS Surprise

 

Autohome Inc. Price and EPS Surprise

Autohome Inc. price-eps-surprise | Autohome Inc. Quote

Additionally, collaboration with OEMs and the dealers is anticipated to positively impact data product penetration, which is yet another positive. For instance, partnership with TTP Advent is expected to aid Autohome in expanding its auto financing business. The company’s partnership synergies and expansion is likely to favor second-quarter results.

Moreover, the number of average DAUs that utilized Autohome mobile website and app came in at 30.2 million (an increase of 14% year over year) in the last reported quarter. The momentum is expected to continue in the quarter under review on the back of efforts to rev up data products and auto financing business.

However, decline in OEM spending on online automobile advertising owing to weakness in the Chinese market and automobile industry remains a risk and is likely to negatively impact the quarter under review.

Further, the company is facing intense competition from Bitauto Holdings BITA, which is reportedly gaining market share considering auto transactions growth despite overall weakness in auto sales.

In a bid to maintain competitive position, Autohome is banking on product innovation and introduction of data products for used vehicles. The company’s continuous investment in data and technology is likely to weigh on in the to-be-reported quarter’s margins.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Autohome has an Earnings ESP of +0.97% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks that Warrant a Look

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Cisco Systems, Inc. CSCO has an Earnings ESP of +1.53% and a Zacks Rank #2. The company is slated to report fourth-quarter fiscal 2019 results on Aug 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International Inc CACI has an Earnings ESP of +4.02% and a Zacks Rank #2. The company is set to report fourth-quarter fiscal 2019 results on Aug 14.

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