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Factors Likely to Decide Vipshop’s (VIPS) Fate in Q1 Earnings


Vipshop Holdings Limited VIPS is slated to report first-quarter 2019 results on May 22, after the closing bell. The company’s earnings have underperformed the Zacks Consensus Estimate in two of the trailing four quarters.

Let’s discuss how things are shaping up for the upcoming quarterly results.

How are Estimates Faring?

The Zacks Consensus Estimate for earnings for the to-be-reported quarter is pegged at 17 cents, which is in line with the year-ago quarter’s reported figure. Notably, the Zacks Consensus Estimate has remained stable in the past seven days. The consensus mark for first-quarter revenues is pegged at $3,032 million, indicating a decline of 4.3% from the prior-year quarter’s reported figure.

Vipshop Holdings Limited Price and EPS Surprise

Vipshop Holdings Limited Price and EPS Surprise

Vipshop Holdings Limited price-eps-surprise | Vipshop Holdings Limited Quote

Factors at Play

Vipshop is likely to gain on its solid promotional strategies. Encouraged by its increased focus on discounted retailing, more suppliers are now willing to collaborate with the company. In this regard, Vipshop formed partnerships with more than 5,500 brands during the December 8th Anniversary Sale. We expect such upsides to drive the top line in the upcoming quarter. Management projected net revenues for the first quarter to be $2.89-$3.04 billion. This indicates growth in the range of flat to increase 5% from revenues reported in the year-ago period.

However, Vipshop is reeling under dismal margins for the past few quarters. To combat this hurdle, the company is undertaking cost containment actions and efforts to enhance category mix. This might contribute to the company’s profitability in the quarter to be reported. .

What Does the Zacks Model Say?

Our proven model does not show that Vipshop is likely to beat estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Vipshop carries a Zacks Rank #2, its Earnings ESP of -3.03% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

The TJX Companies TJX has an Earnings ESP of +0.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation TGT has an Earnings ESP of +0.70% and a Zacks Rank #2.

Costco Wholesale Corporation COST has an Earnings ESP of +1.65% and a Zacks Rank #3.

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