Visible profits from internet stocks: TRVG, WIX, GRUB

Internet stocks Trivago (TRVG), Wix.com (WIX) and GrubHub (GRUB) will report their second-quarter 2018 results on July 25.

Internet stocks Trivago TRVG, Wix.com WIX and GrubHub GRUB will report second-quarter 2018 results on July 25.

Each company’s recent performance has been mixed, and full reports will be crucial for all three. Here’s what you need to know about each company ahead of its second-quarter earnings:

TRVG

Trivago is a technology company offering Internet-related services and products in the field of hotels, accommodation and meta-search engines. The hospitality specialist went public in late 2016 after spinning off EXPE from Expedia.

The company’s performance has been poor this year as the company’s stock has dropped -35.38% so far. Much of that loss may be due to a weak first-quarter earnings report on April 25, which sent the company’s stock down 26% that day. The company reported an earnings loss of $0.07 per share, which was 250% smaller than the Zacks Consense Estimate of a loss of $0.02.

If Trivago wants to regain positive momentum, its second-quarter results must show signs of improvement. However, expectations for this quarter have declined, and the consensus estimate now calls for a loss of $0.07 per share.

Meanwhile, the company has an average EPS surprise of -91.67% over the last four quarters. Another mistake in this case would be potentially disastrous.

WIX

Wix.com is a cloud-based website building platform that enables businesses, organizations and individuals to create custom websites and application platforms. In the last reported quarter, the company recorded a positive earnings surprise of 50%.

With this strong earnings, total revenues increased 49% year over year to $137.8 million, surpassing the Zacks Consensus Estimate of $135 million. Additionally, the company updated its fiscal 2018 revenue guidance to $594 million to $597 million, up from prior estimates of $591 million to $595 million.

Wix’s growth has been greatly accelerated by the growth of e-commerce, especially in retail. Demand for online solutions should continue to grow, especially among small business owners, which bodes well for Wix. Moreover, a strong balance sheet with a sufficient liquidity position and no debt obligations further demonstrates that the company is heading in the right direction.

The Zacks Consensus EPS is expected to be $0.13 per share in the second quarter. Further earnings growth will continue based on the momentum the company currently has. Although Wix is on an upward trend, investors showed hesitation ahead of the results as the company’s shares fell -3.4% on Tuesday, the day before the release.

GRUB

GrubHub is an online and mobile food company that has quickly penetrated the takeout market in the United States. The company delivered impressive first-quarter results, with EPS of $0.52 per share and revenue of $232.6 million, surpassing the Zacks Consensus Estimate. This had an impact on the behavior of share prices, which increased by 53.58% this year.

GrubHub is trying to transition from offline to online food ordering, mainly from millennials who prioritize convenience. The company is a market pioneer and currently dominates the online food delivery market.

Multiple strategic partnerships and acquisitions have also contributed significantly to GrubHub’s growth. The acquisition of Yelp’s YELP Eat24 and Groupon’s GRPN OrderUp expanded the company’s restaurant portfolio, and its partnership with Yum! YUM’s KFC and Taco Bell, together with TripAdvisor TRIP, will continue to develop the brand. GrubHub can continue to pursue these growth strategies because it has approximately $288 million in cash and cash equivalents.

One of the threats to the company’s continued growth is that food delivery sites are becoming more and more crowded. Big names like Amazon (AMZN) and Facebook (FB) are trying to enter the market, along with existing competition from Uber Eats. These competitors will try to challenge GrubHub’s dominance, and it will be interesting to monitor GrubHub’s response.

In the second quarter of 2018, GrubHub is estimated to have EPS of $0.41 per share, representing year-over-year growth of 57.69%. Analyst estimate revisions have been trending upward over the last 60 days.

The Zacks Consensus Estimate estimates revenues of $232.6 million, while GrubHub projects revenues of $228 million to $236 million.

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