Carvana (CVNA) Gears Up for Q3 Earnings: What's in the Cards?

Carvana Co. CVNA is scheduled to report third-quarter 2020 results on Oct 29. In the last reported quarter, it delivered an earnings surprise of 27.9%.

For the third quarter, the Zacks Consensus Estimate for sales is pegged at $1.51 billion, suggesting growth of 37.7% from the year-ago reported figure.

Further, the Zacks Consensus Estimate for loss stands at 30 cents per share, indicating an increase of 46.4% from the year-ago quarter.

The company beat estimates in one of the trailing four quarters, with the average negative surprise being 31.5%.

Let’s see how things have shaped up for this announcement.

Despite coronavirus-induced disruptions, Carvana is expected to have performed well in the third quarter, following a recovery in auto sales in the United States.

With COVID-19 restrictions easing and people getting used to a new normal, the company witnessed strong demand for vehicles. Used car demand from mass-market brands gained momentum, which is expected to continue in the near term. The company witnessed higher year-over-year used car sales.

Markedly, Carvana expects to report strong numbers in the third quarter, in term of automobiles sold, revenues, gross profit per unit and earnings. Moreover, it expects to break even on an EBITDA basis in the quarter.

In addition, Carvana’s third-quarter performance is expected to have benefited from improving logistic capabilities. During the quarter, the company built new facilities, adding more than 100,000 additional units of capacity at full utilization.

Further, its expanding market exposure is likely to get reflected in the to-be-reported quarter’s results.

Carvana Co. Price and EPS Surprise

Carvana Co. Price and EPS Surprise

Carvana Co. price-eps-surprise | Carvana Co. Quote

What Our Model Says

Our proven model predicts an earnings beat for Carvana 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 the case here.

Currently, the company has a Zacks Rank #2 and an Earnings ESP of +15.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a few other stocks that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the quarter to be reported.

Alphabet GOOGL has an Earnings ESP of +7.40% and a Zacks Rank of 2.

TE Connectivity Ltd. TEL has an Earnings ESP of +5.40% and a Zacks Rank #2.

Netflix, Inc. NFLX has an Earnings ESP of +6.09% and holds a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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