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Uber (UBER) Up 4.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Uber Technologies (UBER). Shares have added about 4.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Uber due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Uber's Q1 Loss Narrower Than Expected

Uber incurred a loss (excluding 36 cents from non-recurring items) of 42 cents per share in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of 56 cents. Moreover, the amount of loss narrowed year over year.

Total revenues of $2,903 million missed the Zacks Consensus Estimate of $3,246.7 million and also declined year over year due to coronavirus-led weakness in the ride-hailing segment. The top line and ride-hailing revenues were hurt by a $600-million accrual related to historical claims settlement for its U.K. drivers following their reclassification.

Following an organizational change in the third quarter of 2019, Uber, carrying a Zacks Rank #3 (Hold), started reporting through five segments, namely, Mobility (formerly Rides), Delivery (formerly Eats), Freight, Advanced Technologies Group (“ATG”) and Other Technology Programs, and All Other (formerly Other Bets). The company sold its ATG division in January 2021.

In the first quarter, majority (approximately 60%) of the company’s revenues came from Delivery. Revenues from this segment, which is experiencing a boom with online order volumes from homebound customers surging, skyrocketed more than 200% year over year to $1,741 million. Revenues from the Mobility segment dropped 65% year over year to $853 million. Meanwhile, Freight revenues climbed 51% to $301 million. Rest of the revenues came from All Other sources.

Total revenues declined 11% year over year to $1,849 million in the United States and Canada. While revenues fell 37% to $302 million in Latin America, it soared more than 100% to $527 million in the Asia-Pacific region. However, the same plunged 52% to $225 million in Europe, the Middle East and Africa. Monthly active platform consumers declined 5% to 98 million.

Gross bookings from Mobility declined 38% to $6,773 million. Meanwhile, gross bookings from Delivery augmented more than 100% to $12,461 million. Gross bookings from Freight also climbed 52% to $302 million. Total gross bookings ascended 24% to $19,536 million.

Cost of revenue (excluding depreciation and amortization) increased year over year due to increase in payments for delivery people and freight carriers, as well as higher incentives in some markets. Total costs and expenses dipped 1.9% year over year to $4,427 million with sales and marketing expenses falling 24.6% and research and development expenses decreasing 20.1%. On another positive note, adjusted EBITDA loss narrowed by 41% year over year to $359 million in the reported quarter.

Uber exited the first quarter with cash and cash equivalents of $4,836 million compared with $5,647 million at the end of 2020. Long-term debt, net of current portion at the end of the quarter, was $7,801 million compared with $7,560 million at December 2020-end.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -20.53% due to these changes.

VGM Scores

At this time, Uber has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Uber has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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