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TrueCar (TRUE) to Report Q4 Earnings: What’s in the Cards?


TrueCar, Inc. TRUE is slated to report fourth-quarter 2017 results on Feb 15 after the bell. Last quarter, the company’s earnings matched the Zacks Consensus Estimate.

Notably, TrueCar’s surprise history has been impressive with an average positive earnings surprise of 32.50%. In the last one year, the stock lost 17%, underperforming its industry’s gain of 16.4%.

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

Factors to Consider

TrueCar's revenues improved year over year in the last four quarters, while its losses narrowed. The company’s third-quarter revenues increased 10% from the year-ago quarter. Moreover, non-GAAP net income per share was up significantly from the year-ago quarter.

TrueCar’s core auto buying offering, inventory and pricing solution have been gaining strength. The company is currently working on a number of initiatives that are helping it to grow traffic, raise conversion rates and improve close rates. It is steering upstream into the research and discovery phase of the car buying process, and downstream into the transaction phase. Driven by these, market share and revenues gains are anticipated in the to-be-reported quarter.

Truecar’s business remains strong on both new car and used car fronts. While used car is benefiting from transition to Capsella technology and SEO efforts, new car is riding on dealer network growth and improvement. These factors are expected to contribute to margin expansion in the to-be-reported quarter.

The company made progress with its dealer pledge (reforming product, advertising and business practices), helping it to attract high quality franchise dealers to its platform. The company is expected to grow, owing to the number of dealers in the to-be-reported quarter. Other focus areas include enhancement of trade-ins, digital retailing and affinity partnership.

For the fourth quarter, TrueCar expects revenues between $81 million and $83 million and adjusted EBITDA in the range of $6-$7 million. Additionally, it expects units to remain in the range of 240,000-245,000.

What Our Model Says

TrueCar has a Zacks Rank #4 (Sell) and an Earnings ESP of -16.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP.

The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Stocks to Consider

We see a likely earnings beat for each of the following companies:

NVIDIA Corporation NVDA, with an Earnings ESP of +7.54% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials, Inc. AMAT, with an Earnings ESP of +0.57% and a Zacks Rank #2.

Advanced Micro Devices, Inc. AMD, with an Earnings ESP of +8.72% and a Zacks Rank #3.

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