Will TripAdvisor (TRIP) Disappoint Again In Q2 Earnings?

TripAdvisor Inc. (NASDAQ:TRIP) is slated to report second-quarter 2017 results on Aug 8. Last quarter, the company delivered a negative earnings surprise of 72.2%.

TripAdvisor does not have a decent surprise history. The company missed estimates in each of the trailing four quarters, with an average four-quarter negative surprise of 22.54%.

The company's shares have lost 14.8% year to date, underperforming the industry’s gain of 47.5%.

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

Factors to Consider

TripAdvisor’s first-quarter earnings missed the Zacks Consensus Estimate by a penny.

However, revenues of $372 million increased 17.7% sequentially and 5.7% year over year. The increase was driven by strength in clicked-based advertising and transaction revenues.

Lately, the company has been making efforts to get travelers to book hotels directly on its website instead of just using it as a review site. These efforts will continue to boost the company’s clicked-based advertising and transaction revenues, expanding its top-line growth in the quarter.

The mounting expenses due to new initiatives and investments are hurting the company’s profits. Also, lack of visibility and intensifying competition from Priceline, Expedia (NASDAQ:EXPE) and Alphabet (NASDAQ:GOOGL) continue to be growth concerns.

However, for the second-quarter, the company’s solid fundamentals, strong focus on developing mobile products, expansion into international restaurant reservation and improvement in user growth and engagement, especially on mobile devices, will be the likely drivers.

Earnings Whispers

Our proven model does not conclusively show that TripAdvisor will beat earnings estimates this quarter. That 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: The Most Accurate estimate stands at 16 cents while the Zacks Consensus Estimate is pegged at 19 cents. Hence, the difference is -15.79%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: TripAdvisor has a Zacks Rank #3 (Hold).

We caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

CACI International (NYSE:CACI) with an Earnings ESP of +1.83% and a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.

Broadcom Limited (NASDAQ:AVGO) with an Earnings ESP of +2.57% and a Zacks Rank #2.

MTS Systems Corporation (NASDAQ:MTSC) with an Earnings ESP of +4.35% and a Zacks Rank #3.

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