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Shares Of Groupon Inc. (GRPN) Soaring After Q2 Earnings, Is It In The Midst Of A Turnaround?

Shares of Groupon Inc. GRPN are trading much higher Thursday as investors react to the company's second quarter earnings results . The company posted an adjusted loss of $0.06 per share, better than the Zacks Consensus EPS Estimate of -$0.07. Revenues also came in higher than estimates, as the GRPN posted $756 million, compared to the Zacks Consensus Estimate of $712, and also improving 2.4% on a year-over-year basis.

GRPN saw its North American revenues rise 7% from the year-ago quarter, and billings in the region increased 9% year-over-year. As of June 30 th , 2016 the company had approximately 27.9 million active customers in North America. It added nearly 1.1 million new customers during the quarter.

For 2016, the company increased its revenue guidance to a range of $3 billion to $3.10 billion, from earlier predictions of $2.75 billion-$3.05 billion. The Zacks Consensus Estimate stands at $3.01 billion. Adjusted EBITA for the year is now projected to be between $140 million to $160 million, much higher than the earlier expectation of $85 million to $135 million.

Ever since CEO Rich Williams took over the company, Groupon's business strategy, that focuses on marketing, international, and shopping, appears to be working. He has worked to transform the company from a daily e-mail provider to an online destination for people looking for bargains. Its performance has started to improve over the last few quarters, and the company continues to see strength in its customer acquisition and shopping endeavors, aimed at developing its local core business.

While shares of the company surged around 27% at the market open Thursday, shares of GRPN has lost about 80% of its value over the past five years. Thus far in 2016 though, GRPN is up around 58% year-to-date.

Bottom Line

CEO Rich Williams said in a statement regarding GRPN's earnings report, "We are obviously pretty happy with how it shaped up. It's a sign of steady execution of our key priorities: driving customer growth and new customer additions. You are starting to see those early signs of progress." If that progress continues, GRPN could see its shares steadily climb back to where they once were.

For now though, the company will look to continue to focus on what it sees working well, and doubling down on its locals business, where it sees great opportunity. GRPN is currently a Zacks Rank #3 (Hold), but who knows, after a strong earnings report, increased guidance, and continued success in the current quarter, that ranking could change, and shares of the company could be headed higher.

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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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