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Wayfair (W) Up 19.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Wayfair (W - Free Report) . Shares have added about 19.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wayfair due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Wayfair Q3 Loss Narrower Than Expected, Revenues Rise Y/Y
Wayfair reported a third-quarter 2023 non-GAAP loss of 13 cents per share, which was much narrower than the year-ago quarter’s loss of $2.11.
Net revenues of $2.94 billion increased 3.7% year over year.
A decline in the active customer base negatively impacted results. Active customers were down 4.3% year over year to 22.3 million.
LTM net revenues per active customer decreased 1.6% year over year to $538.
Quarter Details
Net revenues in the United States (87.8% of total net revenues) increased 5.4% year over year to $2.6 billion.
International net revenues (12.2% of total net revenues) declined 7% year over year and 7.8% on a constant currency basis to $372 million.
Orders per customer for the quarter were 1.83, up from 1.82 reported in the year-ago quarter. The figure came ahead of the Zacks Consensus Estimate of 1.82.
The average order value declined 8.6% year over year to $297, which lagged the consensus mark by 1.97%.
The total number of orders delivered in the reported quarter was 9.9 million, which increased 13.8% year over year.
Repeat customers placed 7.9 million orders (accounting for 79.7% of total orders) in the second quarter, up 16.2% year over year.
Additionally, 61.7% of total orders delivered were placed through mobile devices in the reported quarter compared with 58.6% in the year-ago quarter.
Operating Results
Wayfair’s third-quarter gross margin was 31.1%, expanding 210 basis points on a year-over-year basis.
Adjusted EBITDA was $100 million against an EBITDA loss of $124 million in the year-ago quarter.
Customer service and merchant fees decreased 12.8% year over year to $136 million.
Advertising expenses fell 4.5% year over year to $337 million. Selling, operations, technology and general and administrative expenses decreased 9.1% year over year to $596 million.
Wayfair incurred a GAAP operating loss of $152 million in the reported quarter compared with an operating loss of $372 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash, cash equivalents and short-term investments were $1.28 billion, up from $1.25 billion reported on Jun 30, 2023.
Long-term debt, as of Sep 30, 2023, was $3.207 billion compared with $3.205 billion on Jun 30.
In the third quarter, cash generated from operations amounted to $121 million compared with $217 million generated from operations in the second quarter.
Wayfair generated a free cash flow of $42 million in the reported quarter
Guidance
For fourth-quarter 2023, Wayfair expects revenue growth to remain within flat to positive low single-digit range. Gross margin is expected to be between 30% and 31%.
Customer service and merchant fees is expected to be in the range of 4% to 5% of net revenues, and advertising should be in the 11.5% to 12.5% range.
Wayfair expects adjusted EBITDA margins for the fourth quarter to be somewhere in the low single-digit range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 15.92% due to these changes.
VGM Scores
Currently, Wayfair has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wayfair has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Wayfair belongs to the Zacks Internet - Commerce industry. Another stock from the same industry, Amazon (AMZN - Free Report) , has gained 5.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Amazon reported revenues of $143.08 billion in the last reported quarter, representing a year-over-year change of +12.6%. EPS of $0.85 for the same period compares with $0.20 a year ago.
For the current quarter, Amazon is expected to post earnings of $0.77 per share, indicating a change of +266.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.2% over the last 30 days.
Amazon has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Wayfair (W) Up 19.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Wayfair (W - Free Report) . Shares have added about 19.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wayfair due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Wayfair Q3 Loss Narrower Than Expected, Revenues Rise Y/Y
Wayfair reported a third-quarter 2023 non-GAAP loss of 13 cents per share, which was much narrower than the year-ago quarter’s loss of $2.11.
Net revenues of $2.94 billion increased 3.7% year over year.
A decline in the active customer base negatively impacted results. Active customers were down 4.3% year over year to 22.3 million.
LTM net revenues per active customer decreased 1.6% year over year to $538.
Quarter Details
Net revenues in the United States (87.8% of total net revenues) increased 5.4% year over year to $2.6 billion.
International net revenues (12.2% of total net revenues) declined 7% year over year and 7.8% on a constant currency basis to $372 million.
Orders per customer for the quarter were 1.83, up from 1.82 reported in the year-ago quarter. The figure came ahead of the Zacks Consensus Estimate of 1.82.
The average order value declined 8.6% year over year to $297, which lagged the consensus mark by 1.97%.
The total number of orders delivered in the reported quarter was 9.9 million, which increased 13.8% year over year.
Repeat customers placed 7.9 million orders (accounting for 79.7% of total orders) in the second quarter, up 16.2% year over year.
Additionally, 61.7% of total orders delivered were placed through mobile devices in the reported quarter compared with 58.6% in the year-ago quarter.
Operating Results
Wayfair’s third-quarter gross margin was 31.1%, expanding 210 basis points on a year-over-year basis.
Adjusted EBITDA was $100 million against an EBITDA loss of $124 million in the year-ago quarter.
Customer service and merchant fees decreased 12.8% year over year to $136 million.
Advertising expenses fell 4.5% year over year to $337 million. Selling, operations, technology and general and administrative expenses decreased 9.1% year over year to $596 million.
Wayfair incurred a GAAP operating loss of $152 million in the reported quarter compared with an operating loss of $372 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash, cash equivalents and short-term investments were $1.28 billion, up from $1.25 billion reported on Jun 30, 2023.
Long-term debt, as of Sep 30, 2023, was $3.207 billion compared with $3.205 billion on Jun 30.
In the third quarter, cash generated from operations amounted to $121 million compared with $217 million generated from operations in the second quarter.
Wayfair generated a free cash flow of $42 million in the reported quarter
Guidance
For fourth-quarter 2023, Wayfair expects revenue growth to remain within flat to positive low single-digit range. Gross margin is expected to be between 30% and 31%.
Customer service and merchant fees is expected to be in the range of 4% to 5% of net revenues, and advertising should be in the 11.5% to 12.5% range.
Wayfair expects adjusted EBITDA margins for the fourth quarter to be somewhere in the low single-digit range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 15.92% due to these changes.
VGM Scores
Currently, Wayfair has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wayfair has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Wayfair belongs to the Zacks Internet - Commerce industry. Another stock from the same industry, Amazon (AMZN - Free Report) , has gained 5.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Amazon reported revenues of $143.08 billion in the last reported quarter, representing a year-over-year change of +12.6%. EPS of $0.85 for the same period compares with $0.20 a year ago.
For the current quarter, Amazon is expected to post earnings of $0.77 per share, indicating a change of +266.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.2% over the last 30 days.
Amazon has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.