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Overstock (OSTK) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Overstock.com Inc. OSTK is scheduled to report third-quarter 2019 results on Nov 12.

For third-quarter 2019, the Zacks Consensus Estimate for loss is currently pegged at 70 cents per share, which suggests an improvement from the prior-year reported loss of $1.55.

Notably, the company missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters and beat once, the negative surprise being 38.44%.

In the second quarter, Overstock reported a loss of 69 cents per share, which was narrower than the Zacks Consensus Estimate for a loss of 92 cents per share. The figure was also narrower than the year-ago quarter’s loss of $2.20 per share.

Revenues of $373.7 million missed the Zacks Consensus Estimate of $386 million. Further, the figure declined 23% on a year-over-year basis.

Overstock.com, Inc. Price and EPS Surprise

 

Overstock.com, Inc. Price and EPS Surprise

Overstock.com, Inc. price-eps-surprise | Overstock.com, Inc. Quote

Factors at Play

Overstock’s blockchain and retail businesses are likely to have performed well backed by its advanced technologies in the third quarter. This in turn is likely to have driven the company’s top line in the third quarter.

The company has been riding on the growing proliferation of blockchain worldwide. Overstock’s robust Medici business backed by tZERO is anticipated to have contributed to the company’s third-quarter revenues.

The company’s digital wallet and exchange services mobile app — tZERO Crypto App — which was already available on iOS, was launched on Android in the third quarter. This is expected to have driven transaction volume of Overstock in the quarter under review.

Further, the company added a third cryptocurrency to this particular app — Ravencoin — that is expected to have attracted traders to the platform.

Additionally, the company has allowed non-accredited investors to trade tZERO security tokens through the PRO Securities ATS in the third quarter.

All these endeavors are likely to have benefited the performance of tZERO in the third quarter.

Meanwhile, the retail business of the company has been gaining traction on the back of its loyalty program called Club O, which offers free shipping on every order, 5% rewards on every purchase, rewards for writing reviews and much more.

Overstock has also added two new benefits to the loyalty program in the third quarter.

First being price match guarantee that matches a product’s price on the company’s e-commerce site with prices offered by selected competitors for the same product. This is likely to have encouraged shoppers to shop on Overstock.com in the third quarter. Moreover, it is expected to have aided in customer retention in the quarter under review.

Second being the introduction of free returns for in-store credit on all eligible products.

The addition of these two features is likely to have driven the adoption rate of Club O during the third quarter.

Further, the company’s omni-channel 3D and augmented reality (AR) customer experience in e-commerce is expected to have aided the company’s momentum across mobile users.

However, intensifying competition in the online retail market is likely to get reflected in the company’s third-quarter performance. Further, ongoing modifications in the architecture of Overstock’s logistics are anticipated to have negatively impacted the company’s profitability in the quarter under review.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Overstock this time around. 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. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Overstock has an Earnings ESP of 0.00% and a Zacks Rank #3.

Stocks to Consider

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

Pinduoduo, Inc. PDD has an Earnings ESP of +25% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eyenovia, Inc. EYEN has an Earnings ESP of +10.51% and a Zacks Rank #2.

Momo Inc. MOMO has an Earnings ESP of +3.94% and a Zacks Rank #3.

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