Factors Likely To Decide JD.com's (JD) Fate In Q2 Earnings

JD.com, Inc. (NASDAQ:JD) is slated to report second-quarter 2019 results on Aug 13.

The company surpassed estimates thrice in the trailing four quarters, recording average positive earnings surprise of 105.13%. Notably, it reported a positive earnings surprise of 153.85% in the last reported quarter.

JD.com reported first-quarter revenues of RMB 121.1 billion ($18 billion), surpassing the Zacks Consensus Estimate of $17.7 billion.

The top-line growth was attributed to accelerating revenues from both product and services.

For second-quarter 2019, the company expects net revenues between RMB145 billion and RMB150 billion, indicating growth of 19-23% year over year.

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

JD.com, Inc. Price and EPS Surprise

E-Commerce Business & Partnerships: Key Catalysts

JD.com’s e-commerce unit remains a key growth driver and is likely to aid the to-be-reported quarter’s results.

The company’s deepening focus on bolstering e-commerce footprint in international markets is a major positive for the second quarter. Its ongoing investments in emerging markets have been aiding e-commerce business growth and the same is expected to continue in the quarter to be reported as well.

Increasing demand for home appliances, food and beverage, cosmetics, home furnishing, as well as baby products should drive online direct sales in the to-be-reported quarter.

Growing number of flagship stores of international brands on JD.com’s platform and new partnerships should help it enhance product offerings and in turn aid the upcoming results.

The well-performing JD mall and expanding loyal user base, coupled with the above-mentioned factors are anticipated to drive the top line in the to-be-reported quarter.

Other Factors to Consider

The company’s growing logistics initiatives remain positives for the second quarter. Strengthening supply chain management system bodes well for its logistics unit.

However, sluggishness in the third-party logistics services unit remains a concern. Additionally, weakening consumption rate has been continuously affecting its electronics and appliances sale. This is a cause of concern for the quarter to be reported. Further, macroeconomic headwinds in China and the company’s mounting investment costs remain risks for the to-be-reported quarter.

What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if these have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

JD.com currently has a Zacks Rank #2 and an Earnings ESP of +17.86%, a combination that suggests that the company is likely to beat estimates this time around.

Other Stocks to Consider

We see a likely earnings beat for each of the following companies in the to-be-reported quarter.

CACI International, Inc. (NYSE:CACI) has an Earnings ESP of +4.02% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cisco Systems, Inc. (NASDAQ:CSCO) has an Earnings ESP of +0.41% and a Zacks Rank #3.

Ciena (NYSE:CIEN) has an Earnings ESP of +5.26% and a Zacks Rank #2.

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