IQIYI (IQ) Set To Report Q4 Earnings: What's In The Cards?

iQIYI (NASDAQ:IQ) is set to report fourth-quarter 2018 results on Feb 21.

In the last reported quarter, the company reported loss of 63 cents per share that was significantly wider than the Zacks Consensus Estimate of a loss of 41 cents.

Total revenues surged 48% from the year-ago quarter to RMB6.9 billion.

For fourth-quarter 2018, iQIYI expects total revenues between RMB6.48 billion ($943.5 million) and RMB6.75 billion ($982.8 million), representing 43-49% increase year over year.

The Zacks Consensus Estimate for fourth-quarter earnings has remained steady at a loss of 69 cents over the past 30 days. The consensus mark for revenues is currently pegged at $961.5 million.

iQIYI, Inc. Sponsored ADR Price and EPS Surprise

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Let’s see how things are shaping up prior to this announcement.

Factors to Watch Out For

iQIYI is expected to benefit from its content portfolio strength. Strong demand for company-produced drama series, original movies and variety shows is expected to drive top-line growth.

In the last reported quarter, total subscribing members were 80.7 million, up 89% year over year. The momentum is expected to continue in the to-be-reported quarter, primarily owing to content strength.

During the quarter, the company launched iQIYI Vertical Zone mobile app, in which videos entirely can be watched in portrait mode. iQIYI also unveiled the world’s first virtual AI/AR sign language interpreter, which allows hearing impaired watchers to enjoy its content with ease. These initiatives are expected to boost user engagement, thereby driving subscriber base.

However, waning macroeconomic environment in China and regulatory headwind are expected to hurt advertising revenues. In the last reported quarter, online advertising services revenues decreased 4% to RMB2.4 billion.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

iQIYI has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:

Square (NYSE:SQ) has an Earnings ESP of +5.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Workday (NASDAQ:WDAY) has a Zacks Rank #2 and an Earnings ESP of +0.64%.

Discovery (NASDAQ:DISCA) has a Zacks Rank #3 and an Earnings ESP of +4.72%.

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