SINA CorporationSINA is expected to report first-quarter 2016 results on May 11. Last quarter, it posted a positive surprise of 90.91%. However, the company posted an average negative surprise of 80.40% over the trailing four quarters.
Let's see how things are shaping up for this announcement.
Factors at Play
SINA has a strong product pipeline and is investing in product development and marketing. The company's robust user base for its e-Commerce and Weibo offerings are the positives.
However, the company is expected to see some headwinds owing to the weakness in traditional brand advertising, especially for its portal. In addition, the company faces some challenges in its display advertising business owing to the ongoing transition from brand advertising to performance-based advertising. The company's business is also likely to be impacted by the soft macroeconomic conditions in China. In addition, significant restrictions on online search and other social-networking activities in the region remain concerns.
Moreover, Weibo is expected to face stiff competition from the likes of WeChat in China, which may hurt its user base. However, we believe that Weibo's monetization ability will be a major driving factor for SINA amid intensifying competition from the likes of Sohu.com SOHU and NetEase NTES in the video and brand advertising market.
Our proven model does not conclusively show that SINA is likely to beat earnings this quarter. This is because 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: SINA has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 12 cents.
Zacks Rank: SINA 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 momentum.
Stocks to Consider
Here's a stock that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter
The Toronto-Dominion Bank TD has an Earnings ESP of +6.90% and a Zacks Rank #2.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.