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Fitbit (FIT) to Gain From Portfolio Strength in Q3 Earnings

Fitbit, Inc.FIT is set to report third-quarter 2018 results on Oct 31.

The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording an average positive earnings surprise of 30%.

In the last reported quarter, Fitbit's adjusted loss of 22 cents per share was narrower than the Zacks Consensus Estimate of 24 cents.

Revenues of $299.3 million surpassed the consensus mark of $286 million and were above management's guided range of $275-$295. However, the figure was down 15.3% year over year.

The company witnessed decline in its revenues in all regions except Asia on a year-over-year basis. However, strong sales of smartwatch wearables drove the second-quarter results.

For the third quarter, Fitbit expects revenues in the range of $370-$390 million. The Zacks Consensus Estimate for revenues is pegged at $381.5 million.

Further, non-GAAP loss per share is anticipated between 2 cents and 1 cent. The Zacks Consensus Estimate is pegged at a loss of a cent per share.

Let's see how things are shaping up for this quarter.

Fitbit, Inc. Price and EPS Surprise

Fitbit, Inc. Price and EPS Surprise | Fitbit, Inc. Quote

Portfolio Strength to Aid Growth

The company's robust and expanding product portfolio is expected to continue aiding its momentum in the fitness wearable market. This remains positive for the company's top-line in the near term.

Moreover, Fitbit's introduction of new products and sustained focus on health and wellness sector are expected to aid the third-quarter results.

During the to-be-reported quarter, the company expanded its family of Charge devices by unveiling its newest wearable called Charge 3. This latest wearable features its advanced algorithm technology and an extended battery life of up to seven days.

Additionally, expanded its partnership with Humana Inc. HUM and unveiled a new enterprise health care platform, Fitbit Care, which aims at helping people improve health culture and prevent chronic diseases.

Further, its first wearable for children, namely Fitbit Ace, poises the company well in the younger demography.

Moreover, new products launched over the past 12 months, namely Fitbit Ionic, Fitbit Aria 2, Fitbit Flyer and especially Fitbit Versa are anticipated to continue benefiting the company's revenues in the third quarter.

Factors to Consider

Expanding Fitbit Health Solutions business is expected to be a catalyst for the third quarter.

Moreover, management remains optimistic about the increasing demand for its smartwatch wearables. Further, Fitbit's recovery initiatives that include cost structuring and focus on new smartwatches, are likely to boost demand for its products.

We believe the company's strong efforts toward improvement of software and services to offer more personalization to customers, and achieving greater integration into the healthcare ecosystem are major positives.

All these strong endeavours are expected to aid the company's third-quarter results.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP . The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Fitbit currently has a Zacks Rank #3 and an Earnings ESP of +100%, which shows that the company is likely to beat estimates in the quarter under review.

Other Stocks That Warrant a Look

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

AMETEK, Inc. AME has an Earnings ESP of +0.71% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

Generac Holdings Inc. GNRC has an Earnings ESP of +3.19% and a Zacks Rank #2.

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Fitbit, Inc. (FIT): Free Stock Analysis Report

Humana Inc. (HUM): Free Stock Analysis Report

Generac Holdlings Inc. (GNRC): Free Stock Analysis Report

AMETEK, Inc. (AME): Free Stock Analysis Report

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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.


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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