Big Beat for PCLN, Mixed at GRPN
Two major ecommerce players released Q3 earnings results after the closing bell Thursday: Priceline.com (PCLN) posted a big beat on both top and bottom lines, whereas Groupon (GRPN) topped earnings estimates but came well short of sales expectations. In after-market trading, Priceline shares are up 1.5% thus far while Groupon is tanking, down 10%.
Priceline had actually seen a big sell-off in the regular Thursday market, down 3.3% ahead of the earnings announcement. Whether there was anticipation of a big miss is hard to tell, but considering Priceline had posted positive earnings surprises in now at least five straight quarters, it's difficult to imagine this would be a natural assumption. Priceline's stock had risen roughly 70% year-to-date before Thursday's bear run, so perhaps pocketing profits became the thing to do.
Groupon, on the other hand, is down big after its revenue miss in its Q3. This is typical of the online discount deals provider -- when the company beats expectations you see a big swing up in the after-market, but when it misses -- as it has now in two of the past four quarters -- you always see a pretty significant sell-off.
On a GAAP basis, Groupon posted earnings per share of $0.00, beating the Zacks Consensus Estimate of -$0.02. But the company only managed $595 million in sales for the quarter, significantly down from the $614 million expected. With strong efforts being made into the inroads of the mobile app business -- which makes perfect sense for Groupon; many of its customers use the service upon impulse when on the go -- analysts had thought more revenues would have been generated from this growing aspect of its business. Guidance was pretty much in line with the Zacks consensus, though the low end is $20 million under what we were expecting as of today.
Priceline gave earnings guidance a bit higher than what its 8 analysts had been predicting, another sign of good news for the premier online travel booker. In fact, the company has been a model of consistency over the past several quarters, with an average earnings beat of 4.5% over the last 4 quarters. At this time in the after-market, Priceline has already made back its regular day losses.
Success in the ecommerce business is a moving target; it's an exciting place to be, but the trading volume for stocks like Groupon and Priceline can put you on a rollercoaster ride. Currently, both stocks have a Zacks Rank #3 (Hold). We'll look for revisions in the coming days.
Read the Full Research Report on PCLN
Read the Full Research Report on GRPN
Zacks Investment Research
