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Pinterest (PINS) to Report Q3 Earnings: What's in Store?

Zacks Equity Research
·4 min read

Pinterest PINS is set to report third-quarter 2020 results on Oct 28.

The Zacks Consensus Estimate for third-quarter earnings has remained steady at 3 cents per share over the past 30 days.

The consensus mark for revenues is pegged at $382.5 million, indicating an increase of 36.7% from the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, the average surprise being 54.9%.

Pinterest, Inc. Price and EPS Surprise

Pinterest, Inc. Price and EPS Surprise
Pinterest, Inc. Price and EPS Surprise

Pinterest, Inc. price-eps-surprise | Pinterest, Inc. Quote

Factors to Consider

Pinterest’s initiative to improve user engagement by announcing inclusive product updates during the quarter to increase the discoverability of beauty products and tutorials personalized to individual skin tone, style, and preference is expected to have accelerated conversion of searches into product purchases in the soon-to-be-reported quarter.

Additionally, in the third-quarter, Pinterest launched creator-first features including Story Pins in beta, a new creator profile and analytics tools to track performance. These new publishing and measurement tools gave creators ways to easily publish immersive and expansive stories directly on Pinterest.

Moreover, the company’s expansion in countries including the UK, Canada, Australia, Singapore, India and New Zealand amid coronavirus lockdown in the second quarter is expected to have contributed to international user base growth in the to-be reported quarter.

On Jul 31, Pinterest announced crossing 400 million monthly active users (MAUs) milestone with Gen Z and Millennials driving growth. Male users on Pinterest also jumped nearly 50% year over year.

Notably, Pinterest added Adobe Spark, Over, PicMonkey and Canva to the Pinterest Partners program to help make it easier for creators and small and medium businesses to identify trusted creative specialty partners in the last quarter.

In September, Pinterest launched ads alongside visual search results, as well as more places to shop, and with new conversion insights, advertisers can easily see the impact of both their paid and organic Pinterest content. In addition, it expanded shopping tools for Pinners in the UK, bringing shopping inspiration to a new market. This is expected to have increased advertisers on the platform, thus driving average revenue per user (ARPU) in the to-be-reported quarter.

Moreover, the launch of a new app with Shopify SHOP in the second quarter, giving Pinterest’s more than one million merchants a quick way to upload catalogs to Pinterest and turn their products into shoppable Product Pins in just a few clicks, is expected to have improved advertiser engagement and experience on the platform.

However, drop in advertising demand due to coronavirus-led business slowdown across the globe and increasing competition for ad dollars from the likes of Facebook, Amazon, Google and Twitter are expected to have been major headwinds for the company in the soon-to-be reported quarter.

Moreover, rapid growth in international user base is expected to have hurt ARPU in the to-be-reported quarter as monetization rate has been low in international markets.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Pinterest has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Alphabet GOOGL has an Earnings ESP of +7.4% and carries a Zacks Rank of 2, currently.

Etsy, Inc. ETSY has an Earnings ESP of +4.68% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Etsy, Inc. (ETSY) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
Pinterest, Inc. (PINS) : Free Stock Analysis Report
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