Upstart Holdings UPST is slated to release second-quarter 2022 results on Aug 8.
For the second quarter, the company expects revenues between $295 million and $305 million. The Zacks Consensus Estimate for the top line is currently pegged at $228.01 million, suggesting growth of 17.56% year over year.
The consensus mark for the bottom line has remained unchanged at a loss of 5 cents per share over the past 30 days, suggesting a decline of 108.06%.
The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 87.71%.
Upstart Holdings, Inc. Price and EPS Surprise
Upstart Holdings, Inc. price-eps-surprise | Upstart Holdings, Inc. Quote
Factors to Note
Upstart’s second-quarter performance is likely to have benefited from its strategy to operate as a multiproduct company. Strength across Upstart’s auto refinance and personal loan product portfolios might have favored the company’s performance in the to-be-reported quarter.
The company is expected to have benefitted from its R&D initiatives, specifically in its auto refinance section. Upstart recently launched its first AI model for an auto refi that has been helping the company deploy accurate versions of its auto refi model, which is likely to have given the company a competitive advantage in the second quarter.
Upstart’s strategic acquisition of Prodigy back in 2021 is likely to have reaped benefits for the company in the second quarter. Prodigy has helped Upstart rollout its new auto retail product. Due to its buyout of Prodigy, Upstart’s dealership partnership extended from 100 rooftops to 500 in the last reported quarter, which is expected to have increased in the to-be-reported quarter.
The company may have gained from a growing partner base in the second quarter. In the first quarter of 2022, Upstart had 57 bank partners and credit unions and 150 institutional investors funding loans on the Upstart platform.
In the quarter to be reported, Upstart may have benefited from the addition of five lenders who are ready to provide loans with no minimum fico score, which is likely to have attracted more diverse customers.
However, the current macro-economic situation has created a very volatile market, specifically in the financial services industry. The rising inflation and the U.S. Federal Reserve's rapid interest rate hike to counter it is expected to have contributed to the market rotation out of the lending industry.
This is expected to have increased loan pricing in the company’s platform and lowered approval rates for loan applicants, thus reducing transaction volume and impacting the top line negatively.
What Our Model Indicates
Our proven model doesn’t conclusively predict an earnings beat for Upstart this time around. Per the Zacks model, 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. However, that is not the case here.
UPST has a Zacks Rank #3 and an Earnings ESP of 0.00%. 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 worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Blink Charging BLNK has a Zacks Rank #2 and an Earnings ESP of +4.23%. You can see the complete list of today’s Zacks #1 Rank stocks here.
BLNK’s shares have fallen 16.8% in the year-to-date period compared with the Zacks Electronics - Miscellaneous Services industry’s decline of 15.5%.
Intuit INTU has an Earnings ESP of +1.92% and a Zacks Rank #2.
Intuit’s shares have slumped 27.6% in the year-to-date period compared with the Zacks Computer - Software industry’s decline of 18.4%.
Keysight Technologies KEYS has an Earnings ESP of +1.23% and a Zacks Rank #2.
KEY’s shares have slipped 19.9% in the year-to-date period compared with the Zacks Electronics - Measuring Instruments industry’s decline of 21.8%.
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