Groupon Inc. (
is set to report first-quarter 2014 results on May 6, 2014. The
company has posted an average negative earnings surprise of
311.1% over the past four quarters. Year-to-date, Groupon's share
price has plunged 40.2% compared with 2.7% increase in the
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Let's see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Groupon is well positioned to gain from the rising e-Commerce
spending on mobile devices, a profitable domestic market and an
under-penetrated international market. Moreover, increased
traction in the mobile business is another positive for the
For the first quarter of 2014, Groupon forecasts revenues in the
range of $710.0 to $760.0 million, which includes $50.0 million
revenue contribution from the acquired businesses of Ticket
Monster and Ideeli, completed in Jan 2014. The Zacks Consensus
Estimate for revenues is currently pegged at $741.0 million.
Both the acquisitions are expected to negatively impact adjusted
EBITDA by $20.0 million. Groupon expects EBITDA in the range of
$20.0 to $40.0 million for the quarter. Management also stated
that marketing expenses will increase approximately $25.0
Groupon expects to report loss of 4 cents to 2 cents for the
first quarter of 2014. However, this guidance is narrower than
the Zacks Consensus Estimate of a loss of 7 cents.
We note that in North America, the company continues to face
significant competition not only from stalwarts like
but also from small companies like
, which is a major headwind in the near term.
Our proven model does not conclusively show that Groupon is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
: Both the Most Accurate estimate and the Zacks Consensus
Estimate stand at a loss of 7 cents. Hence, the difference is
: Groupon's Zacks Rank #3 (Hold) when combined with 0.00%
Earnings ESP makes surprise prediction difficult.
We caution against stocks with Zack #4 and 5 Ranks (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.