Fitbit Q3 Earnings: Can NYSE:FIT Hit Its -$0.12 EPS Target?

in EARNINGS/INVESTING IDEAS by

Fitbit, Inc. (NYSE:FIT) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of -$0.12/share on revenue of $299.1 million. The consensus earnings per share (EPS) of -$0.12/share is based on a poll of 3 analysts and represents a decline in eps of -24.7% over the same quarter last year, when the company reported earnings of -$0.10/share.

The revenue forecast of $299.1 million based on a poll of 2 analysts implies a year-over-year (YoY) decline in revenue of −13.9%. Last year the company reported $347.2 million in revenue for the quarter.

Expected to report EPS of -$0.12/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $299.10 $347.20 −13.9%
EPS -$0.12 -$0.10 -24.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 1 quarter.

What are your expectations from Fitbit, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.20 -$0.12 38.6% Beat
Q1, 2020 -$0.16 -$0.24 -48.4% Missed
Q4, 2019 $0.03 -$0.12 −444.7% Missed
Q3, 2019 -$0.10 -$0.10 0% Met
Q2, 2019 -$0.18 -$0.14 23.0% Beat
Q1, 2019 -$0.22 -$0.15 32.3% Beat
Q4, 2018 $0.07 $0.14 87.2% Beat
Q3, 2018 -$0.01 $0.04 541.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 4, 2020, the stock price reacted by increasing 1.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $6.41 $6.48 1.1% Increase
May 6, 2020 $6.81 $6.74 −1.0% Decline
February 20, 2020 $6.47 $6.45 −0.3% Decline
November 6, 2019 $7.06 $6.98 −1.1% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.25, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.25 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Fitbit, Inc. is currently trading at $6.99/share, up 0.4% for the day. The company is trading at approximately 96.2% of its 52-week high of $7.26/share. The company’s stock price is up 7.8% since the last earnings report and up 0.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 64.66 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:FIT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −7.34 and a forward P/E multiple of −14.81.

Fitbit, Inc.’s current share price also implies a price-to-book (P/B) multiple of 4.38. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 4, 2020
Stock Price (Current) $6.99
P/E Ratio −7.3x
P/E Ratio (Fwd) −14.8x
PEG Ratio 0.1
Total Debt / Total Capital 4.2%
Levered Free Cash Flow -$96.482 million
EV / EBITDA −4.9x

Finbox

Fitbit, Inc. is a small-cap stock with a market capitalization of $1.877 billion and a total enterprise value of $1.512 billion. The company operates in the Information Technology sector and the Electronic Equipment, Instruments & Components industry.

Fitbit, Inc., a technology company, provides health solutions in the United States and internationally. The company offers a line of devices, including Fitbit Charge 3, Fitbit Inspire, Fitbit Inspire HR, and Fitbit Ace 2 activity trackers; Fitbit Ionic and Fitbit Versa family of smartwatches, as well as Fitbit Flyer wireless headphones and the Fitbit Aria family of connected scales; and accessories, such as bands and frames for its devices. It also offers Fitbit online dashboard and mobile apps that sync automatically with and display real-time data from its wearable devices; and Fitbit Care, a connected health platform for health plans, employers, and health systems. In addition, the company provides Fitbit Premium, a paid subscription service that uses the data of users to deliver actionable guidance and coaching to help users achieve their health and fitness goals, as well as includes Fitbit Coach that offers exercise programs through personal trainer and yoga apps. It sells its products through consumer electronics and specialty, e-commerce, mass merchant, department store, club, and sporting goods and outdoors retailers; wireless carriers; distributors; and Fitbit.com, an online store, as well as directly to consumers. Fitbit, Inc. has a collaboration with The Scripps Research Institute and Stanford Medicine to study the role of wearables to detect, track, and contain infectious diseases, such as COVID-19.; and partnership with Solera Health to reduce risk of type 2 diabetes. The company was formerly known as Healthy Metrics Research, Inc. and changed its name to Fitbit, Inc. in October 2007. Fitbit, Inc. was founded in 2007 and is headquartered in San Francisco, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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