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Can Solid GPV Growth to Boost Square (SQ) in Q1 Earnings?
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Square, Inc. (SQ - Free Report) is scheduled to report first-quarter 2018 results on May 2.
The company topped the Zacks Consensus Estimate in the trailing four quarters with an average beat of 48.37%.
In the last reported quarter, Square delivered a positive earnings surprise of 14.29%. Adjusted earnings came in 8 cents, which grew 60% on a year-over-year basis and 14.3% sequentially.
Total Revenues were $616 million, which increased 36.3% from the prior-year quarter and 5.2% sequentially. Top-line growth was driven by strengthening omni-channel commerce and expanding financial services offerings.
Coming to the price performance, shares of Square have returned 160.3% over a year, outperforming the industry’s rally of 24.9%.
For the first quarter, the company expects total revenues in the range of $605-$620 million and earnings are anticipated between 3 cents and 5 cents.
Let’s see how things are shaping up for this announcement.
GPV Growth to Drive Results
We believe that increasing volume of online transaction holds significant growth opportunity for Square.
Square defines larger sellers as those who make more than $125,000 of annualized GPV and midmarket sellers as those who make more than $500,000 of annualized revenues.
The company is likely to sustain momentum in its Gross Payment Volume (GPV) in the soon-to-be reported quarter. Both larger as well as midmarket sellers will continue to drive the GPV.
Square is expected to continue with the strong growth in invoices, virtual terminal and e-commerce API payments which will further boost the GPV by improving the transaction volume.
In the fourth quarter, the company processed $17.9 billion of GPV, which went up 31% year over year and 2.8% on a sequential basis. Large sellers accounted for 47% of total GPV, which increased 44% year over year. Midmarket sellers also accounted for 20% of GPV, up from 16% in the year-ago quarter.
The Zacks Consensus Estimate for GPV is currently pegged at $17.7 billion for first-quarter 2018.
Robust Product Portfolio — Key Catalyst
Strengthening Instant Deposit, Caviar and Square Capital will continue to benefit the subscription and services segment of the company.
Further, Cash App has been performing well since its launch. It now offers bitcoin exchange, which is likely to drive performance.
Recently, Square acquired certain assets of Entrees On-Trays, which is likely to boost the reach of Square’s Caviar in the region of Dallas and Fort Worth.
Moreover, increasing penetration in existing international markets of Australia, Japan, Canada and the U.K., led by product innovation is likely to drive top-line growth.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Square has a Zacks Rank #3 but it has an Earnings ESP of -0.44%. Therefore, our proven model does not conclusively show an earnings beat for the company this quarter.
Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.
Kemet Corporation (KEM - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3.
NVIDIA (NVDA - Free Report) has an Earnings ESP of +0.65% and a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Can Solid GPV Growth to Boost Square (SQ) in Q1 Earnings?
Square, Inc. (SQ - Free Report) is scheduled to report first-quarter 2018 results on May 2.
The company topped the Zacks Consensus Estimate in the trailing four quarters with an average beat of 48.37%.
In the last reported quarter, Square delivered a positive earnings surprise of 14.29%. Adjusted earnings came in 8 cents, which grew 60% on a year-over-year basis and 14.3% sequentially.
Total Revenues were $616 million, which increased 36.3% from the prior-year quarter and 5.2% sequentially. Top-line growth was driven by strengthening omni-channel commerce and expanding financial services offerings.
Coming to the price performance, shares of Square have returned 160.3% over a year, outperforming the industry’s rally of 24.9%.
For the first quarter, the company expects total revenues in the range of $605-$620 million and earnings are anticipated between 3 cents and 5 cents.
Let’s see how things are shaping up for this announcement.
GPV Growth to Drive Results
We believe that increasing volume of online transaction holds significant growth opportunity for Square.
Square defines larger sellers as those who make more than $125,000 of annualized GPV and midmarket sellers as those who make more than $500,000 of annualized revenues.
The company is likely to sustain momentum in its Gross Payment Volume (GPV) in the soon-to-be reported quarter. Both larger as well as midmarket sellers will continue to drive the GPV.
Square is expected to continue with the strong growth in invoices, virtual terminal and e-commerce API payments which will further boost the GPV by improving the transaction volume.
In the fourth quarter, the company processed $17.9 billion of GPV, which went up 31% year over year and 2.8% on a sequential basis. Large sellers accounted for 47% of total GPV, which increased 44% year over year. Midmarket sellers also accounted for 20% of GPV, up from 16% in the year-ago quarter.
The Zacks Consensus Estimate for GPV is currently pegged at $17.7 billion for first-quarter 2018.
Robust Product Portfolio — Key Catalyst
Strengthening Instant Deposit, Caviar and Square Capital will continue to benefit the subscription and services segment of the company.
Further, Cash App has been performing well since its launch. It now offers bitcoin exchange, which is likely to drive performance.
Recently, Square acquired certain assets of Entrees On-Trays, which is likely to boost the reach of Square’s Caviar in the region of Dallas and Fort Worth.
Moreover, increasing penetration in existing international markets of Australia, Japan, Canada and the U.K., led by product innovation is likely to drive top-line growth.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Square has a Zacks Rank #3 but it has an Earnings ESP of -0.44%. Therefore, our proven model does not conclusively show an earnings beat for the company this quarter.
Square, Inc. Price and EPS Surprise
Square, Inc. Price and EPS Surprise | Square, Inc. Quote
Stocks That Warrant a Look
Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.
Agilent Technologies (A - Free Report) has an Earnings ESP of +3.72% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kemet Corporation (KEM - Free Report) has an Earnings ESP of +6.45% and a Zacks Rank #3.
NVIDIA (NVDA - Free Report) has an Earnings ESP of +0.65% and a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>