TrueCar (TRUE) To Report Q1 Earnings: What's In The Offing?

TrueCar, Inc. (NASDAQ:TRUE) is set to report first-quarter 2018 results on May 8.

The company topped the Zacks Consensus Estimate in all the trailing four quarters, with an average beat of 112.5%.

In the last reported quarter, TrueCar delivered a positive earnings surprise of 400%. Non-Gaap earnings were 5 cents per share as against a loss of 1 cent in the year-ago quarter. The figure grew 150% sequentially.

Total revenues increased 12.1% year over year and 0.8% sequentially to $83.1 million. The top-line growth came on the back of higher number of dealers on the company’s platform, especially, independent dealers whose count grew 15% and revenues from these dealers were up 23% year over year in the fourth quarter.

Notably, shares of TrueCar have lost 9.3% on a year-to-date basis compared to the industry’s loss of 8.2%.

For the first quarter, the company expects revenues in the range of $80-$82 million.

Let’s see how things are shaping up for this quarter.

Factors to Consider

TrueCar continues to benefit from its strong focus toward improvement of USAA channel, pricing and monetization and OEM business.

USAA channel which started gaining traction in the fourth quarter with proper planning is likely to drive the number of units purchased in the quarter under review. This will in turn drive revenues.

In fourth quarter, total number of units purchased was 239.5 million, up 9.4% year over year. For the quarter-to-be reported, units are expected to lie in the range of 230-235 million.

Further, TrueCar’s continued efforts to improvise its franchise dealer business with the help of effective price alignment will boost the franchise dealer base of the company.

Also, the company’s existing OEM incentive programs are running well and are likely to benefit TrueCar’s revenues in the going-to-be reported quarter. Additionally, the ongoing progress in the company’s Capsella project will help the OEM business and trade products to gain momentum with the addition of new features to TrueCar’s consumer site.

Moreover, TrueCar trade-in tool’s strong performance is evident from its growing demand among both consumers and dealers mainly in the Northeast and in Florida. The trend is likely to continue in the quarter under review as well.

What Our Model Says

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. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though TrueCar currently carries a Zacks Rank #3, its 0.00% Earnings ESP makes earnings prediction difficult.

Stocks That Warrant a Look

Here are few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Analog Devices (NASDAQ:ADI) has an Earnings ESP of +0.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kemet Corp. (NYSE:KEM) has an Earnings ESP of +6.45% and a Zacks Rank #3.

NVIDIA (NASDAQ:NVDA) has an Earnings ESP of +0.45% and a Zacks Rank #3.

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