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TrueCar (TRUE) Q3 Earnings: Will it Pull Off a Surprise?

TrueCar, Inc.TRUE is slated to report third-quarter 2016 results on Nov 3. Last quarter, the company posted a positive earnings surprise of 36.84%.

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

Factors to Consider

TrueCar's second-quarter 2016 revenues increased 2% from the year-ago quarter. However, non-GAAP net loss per share of 5 cents was flat.

TrueCar witnessed 12% growth in average monthly unique visitors on a year-over-year basis. The number of units grew 1.14%. Monetization in the quarter also increased marginally from the year-ago quarter.

TrueCar's main focus now is to turn its business around by making refinements in its marketplace so as to meet the demand of car buyers, dealers and original equipment manufacturers (OEMs). TrueCar's business model stands on four pillars namely new car transparency model, value proposition and cost per action model, good relationships with affinity partners and a positive brand image.

The company is working on a new operating plan that incorporates these priorities and focuses on making TrueCar a more balanced and efficient company that creates value for both car dealers and customers. As part of the plan, TrueCar has made some significant changes to its website and revised customer data retention policies.

On the dealer side, TrueCar introduced the Dealer Pledge during the first quarter of 2016 to address concerns and cater to dealer requirements in a better way. Notably, in the second quarter, through the Dealer Pledge, TrueCar was able to resolve disputes with AutoNation, placing 55 of the 300 stores (pulled off TrueCar in July last year) of AutoNation back to its network.

On the franchisee side, the company did exceptionally well in the second quarter. It added 854 net new dealers, the highest ever quarterly addition that helped it cross the 10,000 total franchisee dealer mark for the first time.

On the independent dealer side, TrueCar added 213 independent dealers taking the total count to 2,534, up 41% year over year. This has helped the company grow significantly in the used car side part of the business. The company has hired some top talents, at both higher and lower levels to beef up its dealer sales and service team.

Apart from this, TrueCar is proceeding well with its Capsella project aimed at enhancing front-end user experiences and back-end tools and data bases. Other focus areas as part of its turnaround effort include enhancement of internal research and affinity partnership.

For the third quarter, TrueCar expects revenues between $70 million and $72 million and adjusted EBITDA in the range of $1 million to $1.5 million. Additionally, it expects units to remain in the range of 200,000 to 205,000.

TRUECAR INC Price and EPS Surprise

TRUECAR INC Price and EPS Surprise | TRUECAR INC Quote

Earnings Whispers

Our proven model does not conclusively show that TrueCar is likely to beat estimates this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP : Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 13 cents per share. Hence, the difference is 0.00%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank : TrueCar currently has a Zacks Rank #3 which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:

SITO Mobile, Ltd. SITO , with an Earnings ESP of +100.00% and Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Stratasys Ltd. SSYS , with an Earnings ESP of +41.67% and Zacks Rank #1.

CenturyLink, Inc. CTL , with an Earnings ESP of +1.82% and a Zacks Rank #3.

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TRUECAR INC (TRUE): 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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