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Should Investors Buy, Sell or Hold ANGI Stock Before Q3 Earnings?

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Angi Inc. (ANGI - Free Report) is scheduled to release third-quarter 2024 results on Nov. 11.

The Zacks Consensus Estimate for revenues is currently pegged at $295.9 million, suggesting a 20.42% decline from the year-ago period.

The Zacks Consensus Estimate for earnings is pegged at a breakeven over the past 30 days, indicating improvement from a loss of 1 cent reported in the year-ago period.

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Image Source: Zacks Investment Research

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

In the last reported quarter, Angi delivered an earnings surprise of 200%. ANGI’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 129.17%.

Angi Inc. Price and EPS Surprise

Angi Inc. Price and EPS Surprise

Angi Inc. price-eps-surprise | Angi Inc. Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Angi this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Angi has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Consider

Angi’s third-quarter performance is expected to have been hit by dullness in overall domestic revenues. Ongoing user-experience enhancements as well as lower sales and marketing spend are likely to have resulted in lower service requests and lower acquisition of new service professionals in the to-be-reported quarter. The Zacks Consensus Estimate for domestic Ads and Leads revenues is pegged at $240 million, indicating a decline of 17.8% year over year.

Service revenues are expected to have been hurt by margin-optimization initiatives and lower service requests in the to-be-reported quarter. The Zacks Consensus Estimate for domestic Service revenues is pegged at $23.94 million, indicating a decline of 20.2% year over year.

Nonetheless, Angi has systematically optimized and restructured its sales force to increase retention and quality of service and professionals to drive the bottom line. 

ANGI incorporated online enrolment of professionals to target high-quality professionals and reduce team acquisition costs, which are likely to have boosted customer growth in the to-be-reported quarter. In the second quarter of 2024, 187,000 service professionals completed jobs, advertised services, or sought consumers. 

It has improved marketing efficiency by removing lower-value revenue avenues. ANGI has synergized matching and monetization through technology integration to drive top line. 

In the second quarter of fiscal 2024, Monetized Transactions per Service Request increased 20% to 1.37.

ANGI’s reduction in headcount has also aided in driving efficiency. Its selling and marketing expenses declined 24% to $15.8 million for the second quarter of 2024. 

In the second quarter, international revenues increased 14%, driven primarily by a larger service professional network and higher revenue-per-service-professional. The Zacks Consensus Estimate for third-quarter international revenues is pegged at $32.04 million, indicating growth of 9.4% year over year.

Price Performance & Valuation

Angi has seen its stock return 1.6% year to date, underperforming the Zacks Computer and Technology sector’s return of 28.5%. This pullback has some investors wondering if it is a buying opportunity for the high-growth software company ahead of third-quarter earnings results. 

Year-to-Date Performance

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Image Source: Zacks Investment Research

The stock trades at a discount compared to the broader Zacks Internet - Content industry. As of the latest data, Angi’s forward 12-month P/S ratio hovers around 1.06.

ANGI’s P/S F12M Ratio Depicts Discounted Valuation

Zacks Investment Research
Image Source: Zacks Investment Research

Investment Thesis

Angi operates in the growing home services marketplace sector, with its primary revenue driver being service provider subscriptions and consumer connection fees. The company's strategic shift toward a fixed-price services model could enhance monetization, though margin pressure remains a concern. While benefiting from the digital transformation of home services discovery, Angi faces competition from both traditional referral networks and emerging platforms. Key metrics to watch include service provider acquisition costs, user engagement rates, and take rate stability. The company's integration with IAC's portfolio offers operational synergies but also subjects it to parent company dynamics. Pre-earnings focus will be on fixed-price services growth, consumer demand trends and progress toward profitability.

Conclusion

Given Angi's ongoing operational transformation and market uncertainties, investors may benefit from maintaining a hold position or awaiting a more attractive entry point. The company's pivot to fixed-price services shows promise, but near-term profitability challenges and competitive pressures warrant caution.


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