We are in the middle of the first-quarter 2024 earnings season, which has turned out better-than-expected so far. A few Internet-commerce companies are slated to report their quarter quarterly financial numbers this week. A handful of these stocks carries a favorable Zacks Rank.
Online Retail Sales in Q1 at a Glance
Internet - Commerce continues to evolve as the technologies driving it progress. On the one hand are increasingly powerful and capable user devices. On the other hand, there are sophisticated, AI-enabled software platforms facilitating transactions more capable of delivering user satisfaction.
Differentiation comes from better technology for improved showcasing, easier navigation and payment, speedier delivery and returns, brand building, comparison shopping, loyalty, etc., as well as more shipping options, which generally tip the scales in favor of larger players.
Online retail sales were weak in January and February due to soft holiday sales in the 2023-24 season. However, online sales picked up in March climbing 2.7% month over month and 11.3% year over year.
Within the Retail sector, the Zacks-defined Internet-Commerce industry is currently in the top 13% of the Zacks Industry Rank. In the past year, the industry has provided 52.7% returns. Year to date, it has advanced 11.3%. Since the industry is ranked in the top half of Zacks Ranked Industries, we expect the e-commerce industry to outperform the market over the next 3 to 6 months.
Our Top Picks
We have narrowed our search to three e-commerce stocks that are poised to beat on first-quarter earnings results this week. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our three picks in the last quarter.
Image Source: Zacks Investment Research
Amazon.com Inc. AMZN has benefited from the Prime and AWS’ momentum. The strengthening AWS services portfolio and its growing adoption rate have contributed to the performance of AMZN. Ultrafast delivery services and an expanding content portfolio have been beneficial. Strengthening relationships with third-party sellers have also favored the company. AMZN’s robust advertising business has contributed as well.
Notably, improving Alexa skills along with robust smart home product offerings continue to act as a tailwind. AMZN’s strong global presence and solid momentum among small and medium businesses remain positive. Growing capabilities in grocery, pharmacy, healthcare and autonomous driving are the other catalysts. Also, its deepening focus on generative AI is a major plus.
Zacks Rank #2 Amazon.com has an Earnings ESP of +7.51%. It has an expected earnings growth rate of 42.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last seven days.
Amazon.com recorded earnings surprises in the last four reported quarters, with an average beat of 51%. The company is set to release earnings results on Apr 30, after the closing bell.
Booking Holdings Inc. BKNG has been benefiting from strength in the overall travel demand environment, particularly in global leisure travel. This, in turn, has lowered cancellation rates. Strong momentum across merchants as well as advertising and other businesses, boosted BKNG’s top-line growth.
Strong growth in rental car and airline ticket units is another positive. Strength across room nights and gross bookings, owing to BKNG’s favorable demand environment, bolstered its results. Further, strengthening alternative accommodation business and flight capabilities were major positives.
Zacks Rank #1 Booking Holdings has an Earnings ESP of +4.13%. It has an expected earnings growth rate of 15.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Booking Holdings recorded earnings surprises in the last four reported quarters, with an average beat of 13.8%. The company is set to release earnings results on May 2, after the closing bell.
Wayfair Inc. W is benefiting from growing momentum across active customers, owing to lower costs and increasing customer and supplier loyalties. Growing merchandising efforts are contributing well to W’s top-line growth. Strengthening market share, driven by broad availability and fast delivery of products, is a tailwind.
Increasing operational efficiency, driven by lower personnel and information technology costs, is a major positive. Growing momentum across U.K. customers, owing to W’s strength in logistics, is driving growth. Additionally, W’s strong momentum across repeat customers is a plus.
Zacks Rank #2 Wayfair has an Earnings ESP of +60.20%. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the last 30 days.
Wayfair recorded earnings surprises in the last four reported quarters, with an average beat of 71.9%. The company is set to release earnings results on May 2, before the opening bell.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
