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Factors Likely to Decide JD.com's (JD) Fate in Q3 Earnings

Zacks Equity Research

JD.com, Inc. JD is slated to report third-quarter 2019 results on Nov 15.

For third-quarter 2019, the Zacks Consensus Estimate for earnings has remained stable at 18 cents over the past 30 days. The figure indicates growth of 50% from the year-ago reported figure.

Moreover, the consensus mark for revenues is pegged at $18.4 billion, implying growth of 20.6% from the year-ago reported figure.

The company surpassed estimates in all the trailing four quarters, recording average positive earnings surprise of 186.38%.

Performance in the Last Reported Quarter

JD.com reported third-quarter revenues of RMB 150.3 billion ($21.9 billion), surpassing the Zacks Consensus Estimate of $21.7 billion.

Earnings of 33 cents per share surpassed the Zacks Consensus Estimate by 24 cents. The figure also improved 22.9% year over year.

Let's see how things have shaped up prior to this announcement.

 

JD.com, Inc. Price and EPS Surprise

 

JD.com, Inc. Price and EPS Surprise

JD.com, Inc. price-eps-surprise | JD.com, Inc. Quote

E-Commerce Business & Partnerships: Key Catalysts

JD.com’s e-commerce unit remains a key growth driver that is likely to have aided the to-be-reported quarter’s earnings.

The company’s deepening focus on bolstering e-commerce footprint in international markets is likely to have been a major positive for the third quarter. Its ongoing investments in emerging markets are likely to have aided e-commerce business growth in the quarter.

Increasing demand for home appliances, food and beverage, cosmetics, home furnishing, as well as baby products is likely tohave driven online direct sales in the to-be-reported quarter.

Growing number of flagship stores of international brands on JD.com’s platform and new partnerships might have helped it to enhance product offerings.

The well-performing JD mall and expanding loyal user base, coupled with the above-mentioned factors are anticipated to have driven the top line in the to-be-reported quarter.For third-quarter 2019, the company expects net revenues between RMB126 billion and RMB130 billion, indicating year-over-year growth of 20-24%.

Other Factors to Note

The company’s growing logistics initiatives are likely to have remained tailwinds for the third quarter. Strengthening supply chain management system is likely to have buoyed its logistics unit.

However, sluggishness in the third-party logistics services unit may have remained a concern. Additionally, weakening consumption rate has been affecting its electronics and appliances sale. Further, macroeconomic headwinds in China and the company’s mounting investment costs might have been risks for the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for JD.com this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, JD.com has a Zacks Rank #2.

Stocks That Warrant a Look

Here are a few stocks worth considering, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Pinduoduo, Inc. PDD has an Earnings ESP of +25.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hewlett Packard Enterprise Company HPE has an Earnings ESP of +8.70% and a Zacks Rank #2.

Momo Inc. MOMO has an Earnings ESP of +3.94% and a Zacks Rank #3.

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