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TrueCar (TRUE) Q4 Earnings: Will it Pull Off a Surprise?

TrueCar, Inc.TRUE is slated to report fourth-quarter 2016 results on Feb 16. Last quarter, the company posted a positive earnings surprise of 30.77%.

Over the last one year, the stock has outperformed the Zacks Internet - Services industry. It has gained 139.6% compared with the industry's gain of 17.8%.

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

Factors to Consider

TrueCar's third-quarter 2016 revenues increased 4.2% from the year-ago quarter. Moreover, non-GAAP net loss per share narrowed to 9 cents from 12 cents reported in the year-ago quarter.

TrueCar witnessed 15% growth in average monthly unique visitors on a year-over-year basis. The number of units grew 6%. However, monetization in the quarter was down 1.5% from the year-ago quarter.

TrueCar has been focused on turning its business around by making refinements in its marketplace so as to meet the demand of car buyers, dealers and original equipment manufacturers (OEMs). The company is working on a new operating plan that incorporates this priority and focuses on making TrueCar a more balanced and efficient company that creates value for both car dealers and customers.

On the dealer side, the company is progressing well with its dealer coverage that addresses concerns and caters to dealer requirements in a better way. On the product side, TrueCar has recently made research driven product changes to its price report page and registration flow in order to bring more clarity to its marketing message. This has been attracting more real car buyers to TrueCar's platform thus increasing conversion rate. The trend is expected to continue in the fourth quarter.

On the affinity partner business side, the company launched two big new partnerships with caranddriver.com and Chase Bank. Both these partnerships along with Sam's Club are expected to drive growth in the company's partner channel. On the technology side, TrueCar is proceeding well with its Capsella project aimed at enhancing front-end user experiences and back-end tools and database. Through the Capsella technology, the company took the used car service out of its own data center to Amazon's AMZN AWS.

For the fourth quarter, TrueCar expects revenues between $70 million and $72 million and adjusted EBITDA in a range of $2 million to $3 million. Additionally, it expects units to remain in a range of 205,000 to 210,000.

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%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

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) 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:

Dollar Tree Inc. DLTR , expected to release earnings around Mar 7, has an Earnings ESP of +0.75% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Costco Wholesale Corp. COST , expected to report earnings on Mar 2, currently has an Earnings ESP of +0.74% and a Zacks Rank #3 .

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

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Costco Wholesale Corporation (COST): 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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