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Groupon (GRPN) Shares Rebound on Restructuring Efforts

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Shares of Groupon Inc.GRPN have rebounded strongly this year after a disappointing 2016. As compared with the Zacks Electronic Commerce industry's increase of 15.6%, the stock has gained 23.2% on a year-to-date basis driven by solid execution of restructuring initiatives.

The daily deals provider continues to exit international non-core markets as per plan. During fourth-quarter 2016, Groupon reduced its country presence to 24 from 47.

Fave platform developer KFit Group - which had acquired Groupon Malaysia and Indonesia in 2016 - recently acquired Groupon Singapore. The company plans to finally operate in 15 countries in Europe and North America.

Restructuring Impacts Q4 Results

The positive effect of the restructuring plan has started reflecting in financial results. Although overall gross billings dipped slightly in the fourth quarter, billings from North America (Groupon's core market) advanced 5.9% year over year.

Notably, North America local gross billings of $1.1 billion grew 5.9% and North America local revenues of $650.8 million grew 4.5% in the reported quarter. The year-over-year growth can primarily be attributable to new customer additions as well as the acquisition of LivingSocial.

Groupon added nearly 5.2 million new customers in the quarter. Further, apart from exiting non-core markets, the company reduced headcount in North America, which lowered its operating loss. (Read More: Groupon Q4 Earnings and Revenues Beat Estimates )

Groupon, Inc. Price and Consensus

Groupon, Inc. Price and Consensus | Groupon, Inc. Quote

What's Next for Groupon?

We believe that the restructuring of Groupon Goods from a lower-margin focused business to a higher-margin business will prove healthier for the company's financials. Moreover, improving customer service and net promoter score are positive for the company's brand value.

Groupon's mobile application was the second most visited retail application in the U.S. in Dec, 2016 trailing only Amazon AMZN according to comScore. We expect the growing adoption of the mobile application to be a strong catalyst going ahead.

Zacks Rank & Key Picks

Currently, Groupon carries a Zacks Rank #3 (Hold). Alibaba BABA and MercadoLibre MELI are two better-ranked stocks in the sector with a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Long-term earnings growth rate for Alibaba and MercadoLibre are currently pegged at 26.1% and 25.2%, respectively.

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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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