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Liberty Interactive Corporation (NASDAQ:QVCA) is expected to report third-quarter 2017 results on Nov 9, before the opening bell.
Last quarter, the company’s bottom line met with the Zacks Consensus Estimate. The company’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average positive surprise of 18.44%.
Let’s see how things are shaping up for this announcement.
Why Do We Expect a Positive Surprise?
Our proven model shows that Liberty Interactive is likely to beat estimates because it has the right combination of the two key elements.
Zacks ESP: Liberty Interactive has an Earnings ESP of +20.00%. This is because the Most Accurate estimate is 18 cents, while the Zacks Consensus Estimate is pegged at 15 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Liberty Interactive currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating estimates. The combination of the company’s favorableZacks Rank and positive ESP makes us confident of an earnings beat.
Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
Liberty Interactive’s QVC division continues to benefit from the surge in online sales and the growing adoption of high-end smartphones in the United States. QVC is gradually expanding its presence in developed international markets such as Japan, Germany, Italy and the U.K., to achieve high growth rate. Liberty Interactive is optimistic about its operations in China. We believe that the $2.1-billion stock purchase deal to acquire the fellow home-shopping platform HSN Inc. (NASDAQ:HSNI) should provide increased scale and competitive position for the QVC unit. It will also generate synergies through cost reduction and revenue growth opportunities
However, Liberty Interactive’s businesses are susceptible to rapid technological changes, which increase expenses. The company continues to face headwinds such as global economic crisis, foreign exchange risks and competition. Liberty Interactive competes with large online sellers like Amazon.com Inc. (NASDAQ:AMZN) and Alibaba (NYSE:BABA) Group Holding Ltd.
In the past three months, the company’s shares have lost 5.5% compared with the industry's 0.7% decline.
Key Pick
Here is a company in the broader Retail-Wholesale sector — which houses Liberty Interactive — that has the right components to deliver earnings beat this quarter.
AutoNation Inc (NYSE:AN) has an Earnings ESP of +2.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is set to release third-quarter results on Feb 2, 2018. The company’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters, with an average beat of 5.47%.
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