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What Awaits Luckin Coffee (LK) in its Debut Q2 Earnings?

Zacks Equity Research

Luckin Coffee Inc. LK, which got listed on NASDAQ in May 2019, is slated to report second-quarter 2019 results on Aug 14. Founded in Beijing in October 2017, the company is headquartered in Xiamen. This China-based company offers freshly brewed drinks, and pre-made food and beverage items.

Luckin Coffee operates pick-up stores, relax stores and delivery kitchens under the Luckin brand. The company also serves its customers online via mobile app, Weixin mini-program and other third-party platforms.

Let’s see how things are shaping up prior to the company’s upcoming earnings release.

Which Way Are Estimates Moving?

The Zacks Consensus Estimate for second-quarter 2019 widened from a loss of 43 cents to 44 cents over the past 30 days. For quarterly revenues, the consensus estimate is pinned at $130.7 million.

Factors to Consider

Luckin Coffee, which is an emerging growth company, remains focused on expanding its footprint through strengthening its both brick-and-mortar and online presence. Also, the company is making efforts to boost its share in China’s thriving coffee retail market backed by a high-growth strategy. Furthermore, Luckin Coffee’s tie-up with the internet-giant Tencent is likely to expand its online share in the quarter to be reported.

Backed by these partnerships, the company is trying to enhance the marketing side of the businesses and explore innovative retail solutions. These activities include promotions, user engagement of WeChat Pay and leverage of WeChat mini program intelligent marketing techniques. Furthermore, Luckin Coffee has been focusing on standardizing its digital operations to analyze customer behavior appropriately and serve them with suitable products and services. All these factors are likely to drive the company’s performance in the to-be-reported quarter.

However, any inconvenience on the part of quality or prices might weigh on the company’s sales, margins and profitability. Further, higher cost of investments in technology and marketing may hurt Luckin Coffee’s overall profitability. Stiff competition from leading players like Starbucks Corporation is an added concern.

What the Zacks Model Says

Our proven model does not show that Luckin Coffee is likely to beat earnings estimates in second-quarter 2019. This 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Luckin Coffee Inc. Sponsored ADR Price and EPS Surprise

Luckin Coffee Inc. Sponsored ADR Price and EPS Surprise

Luckin Coffee Inc. Sponsored ADR price-eps-surprise | Luckin Coffee Inc. Sponsored ADR Quote

Although Luckin Coffee’s Zacks Rank #3 increases the predictive power of earnings beat, its Earnings ESP of -1.15% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases:

The Estee Lauder Companies Inc. EL has an Earnings ESP of +2.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kraft Heinz Company KHC has an Earnings ESP of +8.00% and a Zacks Rank # 3.

Celsius Holdings, Inc. CELH has an Earnings ESP of +0.03% and a Zacks Rank #3.

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The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
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Luckin Coffee Inc. Sponsored ADR (LK) : Free Stock Analysis Report
Celsius Holdings Inc. (CELH) : Free Stock Analysis Report
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