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What's in the Cards for PPDAI Group (PPDF) in Q1 Earnings?

Zacks Equity Research

PPDAI Group Inc. PPDF is slated to announce first-quarter 2019 results on May 15, before market open. This China-based online consumer finance marketplace’s earnings are expected to grow year over year.

Higher revenues, a slight improvement in loan origination volume and decline in operation expenses supported the company’s fourth-quarter 2018 results, which surpassed the Zacks Consensus Estimate.

The consensus estimate for the to-be-reported quarter’s earnings of 24 cents has remained stable over the past seven days. Earnings estimates suggest a rise of 9.1% from the year-ago quarter reported figure.

PPDAI Group Inc. Sponsored ADR Price and EPS Surprise

 

PPDAI Group Inc. Sponsored ADR Price and EPS Surprise

PPDAI Group Inc. Sponsored ADR price-eps-surprise | PPDAI Group Inc. Sponsored ADR Quote

Factors to Influence Q1 Results

PPDAI Group expects loan origination volumes for the to-be-reported quarter to be in the range of RMB18-RMB19 billion. This is higher than the RMB17.6 billion recorded in the fourth quarter of 2018.

Additionally, the company anticipates institutional funds to facilitate around 30% of loan origination volume during the first quarter.

Therefore, with higher loan origination volume, PPDAI Group’s loan facilitation service fees and post-facilitation service fees might modestly improve in the quarter. Thus, overall revenues are expected to grow while slowdown in the Chinese economy may have a slight adverse impact.

On the cost front, operating expenses will likely remain stable as rise in provisions for doubtful accounts (mainly due to a rise in delinquency rate) is expected be offset by decline in share-based compensation costs.

Earnings Whispers

Here is what our quantitative model predicts:

We cannot conclusively predict an earnings beat for PPDAI Group this time. That’s because it does not have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold).

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

Earnings ESP: The Earnings ESP for PPDAI Group is 0.00%.

Zacks Rank: PPDAI Group currently has a Zacks Rank #3, which increases the predictive power of the ESP. But we need to have a positive Earnings ESP to be sure of the earnings beat.

Stocks to Consider

AXA Equitable Holdings, Inc. EQH has been witnessing upward estimate revisions over the past 60 days. Moreover, this Zacks #1 Ranked stock has rallied 2.8% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

Oaktree Capital Group, LLC OAK has been witnessing upward estimate revisions over the past 30 days. Additionally, the stock has jumped 22.1% over the past six months. It currently sports a Zacks Rank #1.

Houlihan Lokey, Inc.’s HLI earnings estimates have remained stable over the past 60 days. Also, the company’s shares have gained nearly 14.6% in six months’ time. At present, it carries a Zacks Rank of 2.

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