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Key Factors to Impact Redfin Corporation (RDFN) Q3 Earnings

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Zacks Equity Research
·4 min read
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Redfin Corporation RDFN is scheduled to report third-quarter 2020 results on Nov 5, after the bell. Though the company’s quarterly results might display a year-over-year decline in revenues, earnings per share is expected to improve.

In the last-reported quarter, this technology-powered residential real estate company reported net loss per share of 8 cents. The results compared favorably with the Zacks Consensus Estimate of loss per share of 24 cents.

Redfin Corporation Price and EPS Surprise

Redfin Corporation Price and EPS Surprise
Redfin Corporation Price and EPS Surprise

Redfin Corporation price-eps-surprise | Redfin Corporation Quote

Let’s see how things have shaped up prior to the third-quarter earnings release.

Factors at Play

Redfin is poised to benefit from its wide offerings in the real estate industry, including brokerage, iBuying, mortgage, and title services. Its real estate search site offers a number of online tools to consumers.

Redfin is expected to benefit from the faster pace of increase in online visits and customer inquiries amid increasing levels of home-buyer interest. The company is also expected to witness market share gains.

In October, the company came up with its preliminary financial results for third quarter. The company disclosed preliminary revenues of $235 million, down 1.5% year on year. Real estate services revenues are estimated at $209 million, up 35.6% year over year. Other revenues are also expected to grow to $8 million from the prior-year tally of $5.16 million.

However, properties revenue of $18.5 million indicates a substantial decline from $80.16 million in the year-ago quarter. Nevertheless, gross profit is estimated at $92 million, up from $53.4 million in the year-ago period.

Moreover, the company estimated 37.5% increase in monthly average visitors from the prior-year quarter. Average number of lead agents of 1,800 reflects an increase from 1,579 in the comparable period prior year. It also estimated brokerage real-estate services transactions of 18,750, up from the year-ago quarter tally of 16,098, while partner real-estate services transactions of 5,100, comparing favorably with the prior-year period figure of 3,499.

Also, the U.S. market share by value for two months ended Aug 31 is estimated to increase to 1.03% from 0.98%.

The Zacks Consensus Estimate for the September-end quarter revenues is currently pegged at $235 million, suggesting a year-over-year slip of 1.5%. The Zacks Consensus Estimate for aggregate home value of real estate transactions is pinned at $11,485 million, up from $7,576 million in the prior quarter.

Redfin’s activities during the quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for third-quarter earnings per share has been revised 19% upward to 25 cents in a month’s time. It also calls for a significant increase from the year-ago quarter’s tally of 7 cents.

Here is what our quantitative model predicts:

Our proven model predicts a positive surprise in terms of earnings per share for Redfin this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Redfin carries a Zacks Rank #2 and has an Earnings ESP of +21.94%.

Other Stocks to Consider

Here are a few other stocks in the broader real estate sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:

Lexington Realty Trust LXP, set to report quarterly numbers on Nov 5, currently has an Earnings ESP of +1.33% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

National Storage Affiliates Trust NSA, slated to release third-quarter earnings on Nov 5, has an Earnings ESP of +1.94% and carries a Zacks Rank of 3, at present.

Ventas, Inc. VTR, scheduled to announce earnings results on Nov 6, has an Earnings ESP of +2.03% and carries a Zacks Rank of 3 at present.

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