Wayfair Q3 Earnings: Can NYSE:W Hit Its $0.83 EPS Target?

in EARNINGS/INVESTING IDEAS by

Wayfair Inc. (NYSE:W) is scheduled to report Q3 earnings results before markets open for trading on November 3, 2020.

The company is expected to report earnings of $0.83/share on revenue of $3.656 billion. The consensus earnings per share (EPS) of $0.83/share is based on a poll of 31 analysts and represents a growth in eps of 137.2% over the same quarter last year, when the company reported earnings of -$2.23/share.

The revenue forecast of $3.656 billion based on a poll of 28 analysts implies a year-over-year (YoY) growth in revenue of 58.6%. Last year the company reported $2.305 billion in revenue for the quarter.

Expected to report EPS of $0.83/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,656.38 $2,305.49 58.6%
EPS $0.83 -$2.23 137.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.10 $3.13 183.3% Beat
Q1, 2020 -$2.61 -$2.30 11.7% Beat
Q4, 2019 -$2.62 -$2.80 -6.9% Missed
Q3, 2019 -$2.06 -$2.23 -8.2% Missed
Q2, 2019 -$1.37 -$1.35 1.1% Beat
Q1, 2019 -$1.61 -$1.62 -0.9% Missed
Q4, 2018 -$1.30 -$1.12 13.9% Beat
Q3, 2018 -$1.09 -$1.28 -17.4% Missed

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 increasing 7.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $290.85 $312.70 7.5% Increase
May 5, 2020 $134.11 $180.81 34.8% Increase
February 28, 2020 $70.35 $63.21 −10.1% Decline
October 31, 2019 $101.08 $83.74 −17.2% 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 −3.50, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.50 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Wayfair Inc. is currently trading at $279.76/share, up 2.0% for the day. The company is trading at approximately 79.2% of its 52-week high of $349.08/share. The company’s stock price is down −10.5% since the last earnings report and up 3.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 46.17 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:W Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −43.05 and a forward P/E multiple of 89.46.

Wayfair Inc.’s current share price also implies a price-to-book (P/B) multiple of −33.58. 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 June 30, 2020
Stock Price (Current) $279.76
P/E Ratio −43.0x
P/E Ratio (Fwd) 89.5x
PEG Ratio −3.5
Total Debt / Total Capital 10.1%
Levered Free Cash Flow $505 million
EV / EBITDA −75.0x

Finbox

Wayfair Inc. is a large-cap stock with a market capitalization of $26.17 billion and a total enterprise value of $26.744 billion. The company operates in the Consumer Discretionary sector and the Internet & Direct Marketing Retail industry.

Wayfair Inc. engages in the e-commerce business in the United States and internationally. It provides approximately eighteen million products for the home sector under various brands. The company offers selection of furniture, décor, decorative accents, housewares, seasonal décor, and other home goods through its sites, including Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold brands. Wayfair Inc. was founded in 2002 and is headquartered in Boston, Massachusetts.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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