What's In The Offing For Overstock (OSTK) In Q2 Earnings?

Overstock.com Inc. (NASDAQ:OSTK) is set to report second-quarter 2019 results on Aug 8.

The company’s earnings missed the Zack Consensus Estimate in the trailing four quarters, with an average negative surprise of 86.76%.

Past-Quarter Performance

In first-quarter 2019, Overstock had reported loss of $1.18 per share, which was wider than the Zacks Consensus Estimate of a loss of 93 cents. However, the figure was narrower than the year-ago quarter’s loss of $1.74 per share.

Revenues of $367.7 million came well above below the Zacks Consensus Estimate of $361 million. However, the figure declined 17% on a year-over-year basis.

Q2 Estimates

For second-quarter 2019, the Zacks Consensus Estimate for revenues is currently pegged at $385.6 million. Further, the consensus mark for loss is projected at 92 cents.

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

Factors at Play

Overstock’s continuous efforts toward strengthening its retail and blockchain offerings are likely to aid the top line in the soon-to-be-reported quarter.

The strategic changes in retail division are enhancing the company’s competency in the market. Further, growing initiatives of the company are expected to aid cash flow generation by the retail business in the quarter under review.

Moreover, the company’s search engine rankings are expected to continue improving in the second quarter on the back of the retail division.

Further, the company expanded its 3D models from mobile apps to mobile web by introducing omni-channel 3D and augmented reality (AR) customer experience in e-commerce in the second quarter. This move will aid the company to expand further among the mobile users.

This is anticipated to drive the top line within the retail segment in the quarter under review.

Additionally, with growing proliferation of blockchain worldwide, the company’s solid blockchain portfolio holds it in good stead. Its robust Medici business is anticipated to contribute to the company’s revenues in the to-be-reported quarter on the back of tZero.

During the second quarter, Overstock rolled out its digital wallet and exchange services mobile app — tZERO Crypto App, which allows users to trade and hold their digital currencies securely on their mobile phones. Currently, the app is compatible with iOS devices and supports bitcoin and ethereum trading.

We believe this is likely to have a positive impact on the company’s to-be-reported quarterly results.

However, modifications in the architecture of Overstock’s logistics in order to strengthen its retail division are expected to hurt second-quarter margin expansion.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP. The 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.

Overstock has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult.

Stocks to Consider

Here are a few of stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Clearway Energy (NYSE:CWEN) has an Earnings ESP of +15.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

JD.com (NASDAQ:JD) has an Earnings ESP of +17.86% and a Zacks Rank #2.

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

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