Photo Credit: Wangdangle

Groupon, Inc. (GRPN) Consumer Discretionary - Internet & Catalog Retail | Reports October 26, After Market Closes

Key Takeaways

• The Estimize consensus is calling for flat earnings on $719.63 million in revenue, 2 cents higher than Wall street on the bottom line and $10 million on the top
• Groupon’s new strategy focused on international, marketing and shopping have lifted performance in recent quarters
• Investors are optimistic that the stock can continue to gain, citing a valuation discrepancy between the company and other online retailers
• What are you expecting for GRPN? 

Online marketplace, Groupon, is scheduled to report third quarter results today, after the market closes. Its performance has picked up since Rich Williams was appointed as CEO in November 2015. Under the new leadership Groupon has been shifting its focus to marketing, international growth and improving its shopping experience. This has paid off in the form of three consecutive beats on the top line and steadily improving growth. Shares are now up nearly 65% year to date and should continue to make gains into the print

Analysts surveyed by Estimize are calling for flat earnings,108% lower than the same period last year. That estimate has climbed 37% in the past 3 months on a number of recent upgrades. Revenue for the period is expected to remain unchanged at $719.63 million, marking a slight setback from the second quarter. Historically shares have declined through the print but given its recent uptrend, investors could see a boost. 

Groupon continues to see improvement in its customer acquisition and shopping initiatives, aimed at local business around the world. In the second quarter, local billings grew 9% on nearly 1.1 million new customers. Most of these gains were recorded in North America which grew double digits in profitability. Recently the company announced it would expanding its on demand food delivery service, called Groupon To Go. The service was first introduced in Chicago and is now making its way to Denver. This is expected to act as a conduit to attract customers to restaurants, thereby opening a new layer of revenue.

Efforts to growth and stimulate growth come at cost though. Groupon has invested heavily in marketing campaigns to stave off competition from eBay and Amazon. These efforts, while helpful for boosting revenue, will take their toll on margins, explaining the losses recorded in the past 3 quarters. Investors are still optimistic that Groupon will make gains tomorrow, given its valuation discrepancy compared to its peers.