Roku, Inc. (NasdaqGS:ROKU) is scheduled to report Q3 earnings results on November 5, 2020.
The company is expected to report earnings of -$0.42/share on revenue of $367.5 million. The consensus earnings per share (EPS) of -$0.42/share is based on a poll of 17 analysts and represents a decline in eps of -91.8% over the same quarter last year, when the company reported earnings of -$0.22/share.
The revenue forecast of $367.5 million based on a poll of 19 analysts implies a year-over-year (YoY) growth in revenue of 40.8%. Last year the company reported $260.9 million in revenue for the quarter.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $367.48 | $260.93 | 40.8% |
| EPS | -$0.42 | -$0.22 | -91.8% |
Earnings Call Trends
Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.
What are your expectations from Roku, Inc. for earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q2, 2020 | -$0.53 | -$0.35 | −33.6% | Beat |
| Q1, 2020 | -$0.46 | -$0.45 | −2.4% | Beat |
| Q4, 2019 | -$0.13 | -$0.13 | −2.0% | Beat |
| Q3, 2019 | -$0.23 | -$0.22 | −2.6% | Beat |
| Q2, 2019 | -$0.20 | -$0.08 | −59.8% | Beat |
| Q1, 2019 | -$0.25 | -$0.09 | −64.0% | Beat |
| Q4, 2018 | $0.04 | $0.05 | 20.8% | Beat |
| Q3, 2018 | -$0.11 | -$0.09 | −20.0% | 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 June 30, 2020, the stock price reacted by falling −7.6%.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| August 5, 2020 | $166.44 | $153.87 | −7.6% | Decline |
| May 7, 2020 | $127.52 | $126.66 | −0.7% | Decline |
| February 13, 2020 | $138.29 | $130.25 | −5.8% | Decline |
| November 6, 2019 | $139.57 | $118.46 | −15.1% | 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 1.05, the model suggests that the company is likely an earnings manipulator. A value of 1.05 implies a 14.7% chance of earnings manipulation.
Fundamentals And Technical Analysis
Roku, Inc. is currently trading at $220.13/share, down −2.2% for the day. The company is trading at approximately 92.1% of its 52-week high of $239.14/share. The company’s stock price is up 43.1% since the last earnings report and down −1.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 65.04 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
The current share price implies a price-to-earnings (P/E) multiple of −197.08 and a forward P/E multiple of −159.52.
Roku, Inc.’s current share price also implies a price-to-book (P/B) multiple of 26.90. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Reported Fiscal Period Key | FY2020.Q2 |
| Period End Date | June 30, 2020 |
| Stock Price (Current) | $220.13 |
| P/E Ratio | −197.1x |
| P/E Ratio (Fwd) | −159.5x |
| PEG Ratio | 0.4 |
| Total Debt / Total Capital | 1.5% |
| Levered Free Cash Flow | -$38.349 million |
| EV / EBITDA | −262.3x |
Roku, Inc. is a large-cap stock with a market capitalization of $28.068 billion and a total enterprise value of $27.613 billion. The company operates in the Communication Services sector and the Entertainment industry.
Roku, Inc., together with its subsidiaries, operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live sports, music, news, and others. As of December 31, 2019, the company had 36.9 million active accounts. It also provides advertising products, including videos ads, brand sponsorships, and audience development campaigns; and manufactures, sells, and licenses TVs under the Roku TV name, as well as subscription and billing services. In addition, the company offers streaming media players and accessories under the Roku brand name; and sells branded channel buttons on remote controls. It provides its products and services through retailers and distributors, as well as directly to customers through its website in the United States, Canada, the United Kingdom, France, the Republic of Ireland, Mexico, and various Latin American countries. The company was founded in 2002 and is headquartered in Los Gatos, California.
