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Is a Surprise in the Cards for JD.com (JD) in Q2 Earnings?


Chinese e-commerce company, JD.com JD is slated to report second-quarter 2017 results on Aug 14 before the bell. Last quarter, the company posted splendid bottom-line results wherein it reported earnings of 8 cents per share while the Zacks Consensus Estimate was pegged at a loss of 5 cents.

Shares of JD.com have gained a massive 88.1% year to date, significantly outperforming the industry’s 47.9% rally.

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

Factors to Consider

JD.com’s first-quarter revenues of $11.1 billion (RMB76.2 billion) surged 41.2% year over year. This was mainly attributed to growth in active user accounts and in the number of fulfilled orders.

JD.com consistently invests to ensure long-term growth, increase brand awareness, broaden product offerings, enhance services offered to sellers on its marketplace platform and expand fulfillment capability. These should strengthen the company’s position and drive results in the to-be-reported quarter.

The company is currently gaining popularity among several international brands. JD Worldwide recently partnered with Wal-Mart subsidiary and British supermarket retailer ASDA to bring British products to Chinese consumers. It also partnered with other leading international brands including Inferno, Bayer and Cetaphil.

Management expects second-quarter net revenue growth between 35% and 39% on a year-over-year basis. However, higher operating expenses and increasing competition from Alibaba and other players could weigh on the company’s results.

JD.com, Inc. Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that JD.com will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 2 cents. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: JD.com’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident of a positive earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some stocks, which you may also want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Luxoft Holding LXFT with an Earnings ESP of +5.17% and a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.

Broadcom Limited AVGO with an Earnings ESP of +2.57% and a Zacks Rank #2.

CACI International CACI with an Earnings ESP of +1.83% and a Zacks Rank #2.

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