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Can New Products & Expansion Aid GoDaddy (GDDY) Q4 Earnings?

Zacks Equity Research

GoDaddy Inc. GDDY is set to report fourth-quarter 2018 results on Feb 20.

In the last reported quarter, the company recorded a negative earnings surprise of 55.56%. Nonetheless, it managed to pull off average four-quarter positive surprise of 1.04%.

The company's shares have gained 30.7% in the past 12 months against its industry’s decline of 18.8%.

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

GoDaddy generates revenues from three segments — Domain, Hosting and Presence, and Business Applications.

All its segments are expected to have performed well in the fourth quarter, driven by increasing investments in products and technology platform, as well as strong customer growth. The company is expanding internationally by investing in technology, marketing programs and customer service teams. Growing international expansion and the shift toward dynamic online presence for small businesses are likely to play an important role in the to-be-reported quarter.

In the last reported quarter, Business Applications revenues were $106.8 million, increasing 4.5% sequentially and 25.9% from the year-ago level. The corresponding Zacks Consensus Estimate for the quarter to be reported is pegged at $114 million.

Domain revenues increased 1.5% sequentially and 14% year over yearin the third quarter. The Zacks Consensus Estimate for fourth-quarter Domain revenues is pegged at $317 million.

Hosting and Presence revenues were $263.2 million in the third quarter, increasing 7.6% sequentially and 16.5% from the prior-year period. The Zacks Consensus Estimate for the same is pegged at $261.0 million for the fourth quarter. The company made efforts to offer advanced but simplified solutions in a bid to expand its small business clientele, thereby boosting Hosting and Presence revenues.

The company’s total bookings in the third quarter were $741.8 million, up 11% year over year. The Zacks Consensus Estimate for the metric is pegged at $734 million for the fourth quarter.

Increasing competition in domain, hosting and presence markets from companies like Endurance, Amazon and Google might impact its results in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

GoDaddy currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%, which is not indicative of a likely positive surprise.

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

GoDaddy Inc. Price and EPS Surprise

 

GoDaddy Inc. Price and EPS Surprise | GoDaddy Inc. Quote

Stocks to Consider

Here are some stocks from the same space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Frontline Ltd. FRO has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. SQ has an Earnings ESP of +5.95% and a Zacks Rank #2.

Gogo Inc. GOGO has an Earnings ESP of +9.46% and a Zacks Rank #3.

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