Why Is Groupon (GRPN) Up 51.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Groupon (GRPN). Shares have added about 51.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Groupon due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Groupon Q3 Earnings Beat Estimates, Revenues Decrease Y/YGroupon reported adjusted earnings of 33 cents per share in the third quarter of 2024, beating the Zacks Consensus Estimate of a loss of 25 cents by 232%. The company reported a loss of $1.31 per share in the year-ago quarter.The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, delivering an average surprise of 107.77%.Revenues of $114.5 million missed the consensus estimate by 3.8%. The figure also decreased 9% on a year-over-year basis (down 10%, excluding the foreign exchange effect).Region-wise, North America revenues of $86.9 million lagged the consensus mark by 3.68% and declined 9% year over year due to an increase in Local voucher redemption rates in the reported period. International revenues of $27.6 million missed the consensus mark by 4.85% and decreased 13% year over year (down 14%, excluding the foreign exchange effect) due to the exit of Local business in Italy.GRPN’s Quarterly DetailsLocal revenues of $105 million missed the Zacks Consensus Estimate by 5.81% and declined 9% year over year (10% excluding the foreign exchange effect). North America Local revenues decreased 8%, while International Local revenues declined 2% year over year.Consolidated Travel revenues of $4.3 million beat the consensus mark by 7.28% and increased 3.4% year over year. North America Travel revenues increased 13.3% year over year. International Travel revenues declined 12.7% in the reported quarter.On a consolidated basis, Goods revenues of $5.2 million beat the consensus mark by 14.58% and declined 23.8% year over year. North America Goods revenues declined 34.5%, while International Goods revenues decreased 11.7%, excluding the foreign exchange effect, on a year-over-year basis.GRPN’s Customer MetricsAt the end of the third quarter, Groupon had approximately 15.5 million active customers compared with 17 million at the end of the year-ago quarter. However, the metric beat the Zacks Consensus Estimate by 3.68%.At the end of the third quarter, the company had approximately 10.2 million active customers based in North America, beating the consensus mark by 6.58% and 5.3 million active international customers, missing the consensus mark by 1.49%.Operating Details of GRPNIn the third quarter, gross profit was $102.9 million, down 7% year over year.Selling, general and administrative expenses fell 10.8% year over year to $71.3 million in the reported quarter. This can be attributed to a decrease in cloud costs. Marketing expenses rose 25.4% to $36.3 million.The company reported a GAAP operating loss of $5.6 million compared with a loss of $464K in the year-ago quarter.GRPN’s Balance Sheet & Cash FlowGroupon exited the quarter with cash and cash equivalents of $159.7 million, up from $178.1 million as of June 30, 2024.In the third quarter, the operating cash outflow was $16.3 million against the operating cash inflow of $15.3 million in the prior quarter.Groupon reported a free cash outflow of $19.7 million against $10.8 million of free cash inflow reported in the previous quarter.GRPN has penned an agreement to raise $197 million in new secured convertible debt, maturing in 2027 with a 6.25% coupon and a $30 strike price.GRPN’s GuidanceFor the fourth quarter of 2024, the company expects revenues in the band of $124-$131 million, indicating a 10-5% year-over-year decline. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $144.38 million, indicating 4.83% year-over-year growth.Adjusted EBITDA is expected to be between $14 million and $19 million.Groupon expects a positive free cash flow for the fourth quarter.For 2024, the company expects revenues between $486 million and $493 million, indicating a year-over-year change in the band of (6)-(4%).Adjusted EBITDA is expected to be between $65 million and $70 million.Groupon expects a positive free cash flow for 2024.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -150% due to these changes.VGM ScoresAt this time, Groupon has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Groupon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerGroupon is part of the Zacks Internet - Commerce industry. Over the past month, Wayfair (W), a stock from the same industry, has gained 42.8%. The company reported its results for the quarter ended September 2024 more than a month ago.Wayfair reported revenues of $2.88 billion in the last reported quarter, representing a year-over-year change of -2%. EPS of $0.22 for the same period compares with -$0.13 a year ago.Wayfair is expected to post break-even earnings per share for the current quarter, representing a year-over-year change of +100%. Over the last 30 days, the Zacks Consensus Estimate has changed -1%.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Wayfair. Also, the stock has a VGM Score of C.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Groupon, Inc. (GRPN): Free Stock Analysis Report Wayfair Inc. (W): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks