Estimize

Happy 2020 Estimize community!

The Estimize platform turns 8 years old this January, can you believe it?! In December, we surpassed 3 million all-time estimates and we’re about to cross 100,000 contributors. You, the Estimize community, have built the most accurate earnings and economic estimates data set on the planet. More importantly, this “public goods market” of estimate data has become the representative consensus of true expectations across the market. Members of the 50 largest investment firms in the US are either contributors to, or clients of, Estimize today.

Now, I want to discuss our product roadmap for the foreseeable future. The past 4 years have been primarily focused on three things: 1) Adding additional data sets for estimation to the platform (Economics and KPIs), 2) enhancing contribution rates and the quality of estimates, and 3) sales engineering. This year, our roadmap will refocus on the public user facing features we’ve had on the drawing board for a long time. Many of these features will involve advanced analytics, to help our community  better identify the important and actionable aspects of the Estimize dataset that you contribute to every day.

To kick off this process, we are excited to announce that we are not only making the Estimize Earnings Edge tool FREE to our entire user base, but will be adding a ton of new features to it. Furthermore, over time, you’ll see additional analytics tools and descriptions added to each ticker’s main page.

Earnings Edge gives you the ability to “screen” the entire data set over a range of different important variables, save those specific  screens, and receive email updates just before market open with names that were added to or removed from those screens. For example, you may want to screen the Estimize data set for a certain sector or industry, or just those tickers releasing within the next 90 days that have an Estimize consensus, or even the largest EPS revisions over the past 7 days within your watchlist, or companies with the largest delta between Estimize and Wall Street consensus, among other options. (In the pictures provided below you'll see a small snapshot of just how many filter categories Earnings Edge provides its users. For a more in-depth view, head over to the Estimize website!) And even better, Earnings Edge will update that list in the background, and provide updates every day!

We’ve also updated Earnings Edge to allow you to make all of your estimates directly from the screen, rather than having to visit each company’s page. Earnings Edge will also conveniently show  which of your estimates are stale and in need of an update. It’s truly a way for all our users to become Estimize Power Users, and also a thank you from the Estimize Team to the community members who have been such a huge part of making our product a success.

For those individuals or institutions who would like full, unrestricted, access to the entire Estimize data set, either through the Earnings Edge platform or via our data feeds, please contact us at [email protected] or visit this link so that we can discuss the best way to get you started.

Once again, a big thank you to the Estimize community for making this platform what it is today, we can’t wait to share all the things we’re building for you in 2020.

Sincerely,

Leigh Drogen

Hello Estimize Community!

Starting today we’re opening up the Estimize historical data sets as well as our live API for anyone to easily test and integrate into their investment strategies, academic research, or financial applications. It takes under 30 seconds to request access which we’ll deliver right to your inbox. 

You can head over to www.estimize.com/sales to see all of the details including an extensive Data Dictionary, Data FAQ, and API Docs. You’ll also find our informational deck and links to some of the many published academic and industry research papers written about the Estimize data set over the past few years. 

It’s hard to express just how proud we are of the community you’ve helped to build over these past 8 years. The aggregate data set is about to pass 3,000,000 estimates made from over 100,000 contributors. Over a dozen published academic and industry research papers have confirmed our initial hypothesis in building the Estimize platform: an open distributed community comprised of individuals from across the financial ecosystem who are far less biased than sell side Wall Street analysts, can produce a deeper, more accurate, and more representative data set of true expectations. 

Estimize institutional clients range from some of the largest systematic quantitative and discretionary hedge funds in the world, to major online brokerage platforms, banks, wealth managers, and leading academics. And we never forget that our business here at Estimize starts and ends with our contributors. 

We want to wish everyone a happy holiday season and a great end to the decade!

All the best,

Leigh Drogen

This week we enter what’s considered peak earnings season for the third quarter of 2018, with roughly 350 S&P 500 companies reporting in the next three weeks. Early on we’ve already gotten a good idea of what to expect for the rest of the season. Blended S&P 500 EPS growth (actuals for the 85 companies that have reported, and estimates for those that haven’t) stands at 20%, with revenues at 8%. While this is softer than the 25% and 23% of the first and second quarters, it would still be the third best result since 2011. With that said, corporate fundamental growth is showing signs of slowing.

While every sector is anticipated to post year over year (YoY) profit growth of at least 6%, Energy is in the lead with 90% still due to easier YoY comparisons, followed by Financials at 39% (although revenue growth only stands at 4%) and Technology at 21% on EPS and 10% on revenues. Despite the massive meltdown in small caps these last couple of weeks, and the general decline of tech over this time, we still like small and mid cap enterprise tech names such as Zendesk, Hubspot and Workday. Fundamentals for these names remain robust, and for the time being they continue to benefit from the massive cap-ex spending cycle we’ve been seeing over the past year in this space.

In spite of high expectations and strong results, a slew of concerns seem to be dominating press releases thus far, ranging from trade war fears, to rising rates and wage costs. But none more so than the stronger dollar, which is somewhat surprising as the US Dollar Index is only up 5% for the year. Even so, roughly a third of reporting companies have commented on the negative impact of foreign exchange when repatriating revenues back to the dollar. Around 50% of S&P 500 revenues come from abroad. Thus far, only around a fifth of reporting companies have mentioned tariffs as a concern going forward. Early guidance for Q4 and CY 19 is starting out a little softer than where it was at this point in the last two quarters.

Marriott is set to report next Monday, August 6th, and there might be some problems for the hospitality provider. Estimize predicts that the EPS will increase to $1.39 which is a 23% increase year over year (YoY) and a two cent increase from the previous quarter (Q1 2018). This is a sign of growth for the company and demonstrates greater dollar yield per share.

Revenue is the main concern as it decreased significantly last quarter (Q1 2018) to $5.0 billion—significantly lower than predicted estimates. Estimize predicts that Marriott revenue will be at $5.99 billion this quarter (Q2 2018) which is a 3% (YoY) increase. Given that last quarter (Q1 2018) revenue was lower than expected, the Estimize consensus predicts a large bump in revenue this quarter (Q2 2018). If last quarter’s trend continues though, Marriott could be in a bit of trouble.

To look for new, innovative ways into its market, Marriott is, according to The Motley Fool, “exploring several innovative strategies to continue to protect and expand its market share.” (1) In an experiment, Marriott—in conjunction with a London based company—is working on “bring[ing] Marriott-level service and quality to travelers seeking a curated home-stay experience.” (1) With this, Marriott hopes to curtail the pressure from Airbnb, a company which mainly provides this “home-stay” experience. Other innovations include a partnership with Chinese-based tech giant Alibaba and an investment into cruise ships. These two investments might prove costly in the short-term, but could yield long-term benefits.

Overall, Marriott should be a solid bet. Last quarter’s revenue drop seems more like an outlier than anything else. So, will Marriott pull through its recent revenue slump? It’s definitely looking that way.  

How do you think Marriott will do? Estimate here!

Photo Credit: Bryan Fulmore

The Beats

To determine possible positive surprises we look for companies that have the following characteristics: 1. Large positive deltas vs. Wall Street 2. Significant upward revisions momentum into the report  3. A long history of beating 4. A long history of Estimize accuracy vs. the Street CyberArk Software (CYBR)

Information Technology - Software | Reports August 7, after the close.

The Estimize community is looking for earnings per share (EPS) of $0.29 when CyberArk reports on Tuesday, revised upward by 19% in the last 3 months and 19% higher than Wall Street’s $0.24. Revenues are also expected to come in higher at $75.5M as compared to the sell side’s consensus of $72.9M. Year-over-year (YoY) EPS and revenue growth are expected to come in healthy at 37% and 31%, respectively. This is a name that tends to beat the Estimize consensus 93% of the time on EPS and 93% on revenues, and that Estimize is more accurate than Wall Street on 93% of the time on EPS and 93% on Revenue.

This cybersecurity name continues to benefit from widespread data breaches, as corporations and governments increase spending on software to prevent future instances. In addition to improving EPS and revenue growth, the Estimize community also expects License Revenue to grow 23% YoY to $37.2M. Increased demand in the space has lead to CyberArk ramping up its acquisition strategy, most recently with the purchase of cloud security provider, Valuative, earlier this year. Also expected to increase the top-line is the CyberArk Marketplace, launched in Q2. According to the press release this is “the industry’s broadest and deepest portfolio of integrations with a privileged access security solution. The CyberArk Marketplace delivers unprecedented simplicity and speed for security and IT operations teams to extend the benefits of securing privileged access across the enterprise.”

New Relic (NEWR)

Information Technology - Internet & Software Services | Reports August 7, after the close.

The Estimize community is looking for earnings per share (EPS) of $0.14 when New Relic reports on Tuesday, revised upward by 169% in the last 3 months and 18% higher than Wall Street’s $0.12. Revenues are also expected to come in higher at $106.8M as compared to the sell side’s consensus of $106.1M. Year-over-year (YoY) EPS and revenue growth are expected to come in healthy at 251% and 33%, respectively. This is a name that tends to beat the Estimize consensus 91% of the time on EPS and 91% on revenues, and that Estimize is more accurate than Wall Street on 91% of the time on EPS and 100% on Revenue in the last 11 quarters.

We continue to believe that the enterprise tech sector is THE place for investors to focus given the massive cap-ex spending cycle within main street businesses that is taking place. These companies are showing large and upwardly revised revenue growth estimates and have massive leverage on that revenue given the limited need for headcount in a very tight labor market. New Relic is one beneficiary of this increased spending, with their bread and butter products including application performance monitoring (APM) tools which help companies garner insights on how specific segments of their business are performing through conversion metrics, website analytics and other metrics. Even NEWR’s non-APM business is expected to catch up to APM in the next 5 years.

Michael Kors (KORS)

Consumer Discretionary - Textiles, Apparel & Luxury Goods | Reports August 8, before the open.

The Estimize community is looking for earnings per share (EPS) of $1.00 when Michael Kors reports on Wednesday, revised upward by 11% in the last 3 months and 6% higher than Wall Street’s $0.94. Revenues are also expected to come in higher at $1.16B as compared to the sell side’s consensus of $1.14B. Year-over-year (YoY) EPS and revenue growth are expected to come in healthy at 25% and 22%, respectively. This is a name that tends to beat the Estimize consensus 84% of the time on EPS and 84% on revenues, and that Estimize is more accurate than Wall Street on 92% of the time on EPS and 92% on Revenue.

This is not a name you would have expected to see on this list in the last year or two, after KORS suffered some missteps and weakening demand as it tried to straddle the luxury and affordable accessories categories. In order to reinstate it’s cache it started offering fewer online promotions, closed down underperforming stores and began innovating on new product lines which includes men’s footwear. The company is investing heavily in their digital platforms in order to offer a more seamless customer experience at a time when online buying continues to expand. International growth is anticipated to grow as well, especially with acquisitions of brands such as Jimmy Choo.

The Misses

To determine possible positive surprises we look for companies that have the following characteristics: 1. Large positive deltas vs. Wall Street 2. Significant downward revisions momentum into the report  3. A long history of missing 4. A long history of Estimize accuracy vs. the Street

Hertz Global Holdings (HTZ)

Industrials - Road & Rail | Reports August 6, after the close.

The Estimize community is looking for earnings per share (EPS) of -$0.33 when Hertz reports tomorrow after the bell, revised downward by 382% in the last 3 months and 30% lower than Wall Street’s -$0.25. Revenues are roughly in-line at $2.3B. Despite falling expectations, the company is still expected to see year-over-year (YoY) of 48% in EPS and 5% for revenues. However, this is a name that has only beaten the Estimize EPS consensus 18% of the time, and only 36% of the time for revenues, which doesn’t bode well for a positive surprise tomorrow.

With the dominance of Uber, Lyft and other ride sharing services, it’s been increasingly difficult for Hertz and other rental car businesses to compete. The stock is already down 30% this year, with Avis, the only other publicly traded rental car company, not far behind at -20% for the year. Rental cars haven’t traditionally been considered solid businesses as they carry high costs and there are several cheaper alternatives. The Ubers and Lyfts of the world aren’t the only worry for Hertz, but the progression of autonomous driving vehicles will likely make the entire industry obsolete.

ANGI Homeservices (ANGI)

Information Technology - Internet & Software Services | Reports August 8, after the close.

The Estimize community is looking for earnings per share (EPS) of $0.00 when ANGI Homeservices reports on Wednesday, revised downward by 89% in the last 3 months and a penny lower than Wall Street. Revenues expectations of $292.6M are also lower than the sell-side’s $293.6M, falling 4% in the last 3 months. Despite falling expectations, the company is still expected to see year-over-year (YoY) growth of 99% in EPS and 302% for revenues. However, this is a name that has only beaten the Estimize EPS consensus 50% of the time, and only 38% of the time for revenues, which doesn’t bode well for a positive surprise tomorrow, with Estimize being more accurate than Wall Street 67% of the time.

Groupon Inc. is set to report this Friday, August 3rd and things are not looking so good for the coupon/voucher services company. Earnings per share (EPS) is projected to increase… by a whopping 1¢ from the previous quarter (Q1 2018). In terms of year over year (YoY%) that is technically a 100% increase. However, going from $0.02 (Q2 2017) to $0.04 (proj. Q2 2018) in a year is not a strong indicator of growth.

Furthermore, revenue is projected to decrease 4% YoY. This is a worrying sign, even as revenue is projected to increase this quarter (Q2 2018) over the last quarter (Q1 2018) by $8.59 million. The true performance indicator of Groupon lies with its yearly growth—or lack thereof.

Groupon also just lost an $83 million lawsuit with IBM in which Groupon was accused “of building its online coupon business on the back of the IBM e-commerce inventions without permission.” (1) Groupon’s loss in this lawsuit is not only a troubling indicator of Groupon's poor judgement, but also it is sure to lower the stock price as confidence in the company and its (questionable) practices may decrease.

Furthermore, Groupon’s acquisition rate of North American Active Customers is projected to grow only by 3% (YoY). This increase is much smaller when compared to the same quarter last year (Q2 2017), when Groupon’s North American Active Customers increased by 14%. Compared to Q2 2017, the decreased rate of growth this quarter is a strong indicator of one of Groupon’s weaknesses in the market itself. It demonstrates a lack of active customer development from year to year. Groupon needs to find a way to appeal to more e-shoppers (and maintain its integrity) if it hopes to be financially viable in the future.   

How do you think Groupon will do? Estimate here!

1:Yasiejko, Christopher. “IBM Wins $83 Million from Groupon in e-Commerce Patent Fight.” Chicagotribune.com, 30 July 2018, www.chicagotribune.com/business/ct-biz-ibm-groupon-ecommerce-patent-suit-20180730-story.html.

TSLA

Tesla Inc.

Consumer Discretionary - Automobiles

Tesla Inc. is scheduled to release their FQ2’18 earnings today, August 1st, after the market closes. According to Estimize, the earnings per share (EPS) for Tesla is anticipated to come in at -$2.75, which would denote a year-over-year decrease of -103%. Wall Street anticipates an EPS of -$2.76.  Estimize projects a revenue of $3.865B in comparison to Wall Street’s estimate of $3.790B in revenue. Tesla announced Q2 Deliveries early, delivering 53,339 vehicles during the quarter, a 142% increase YoY, and beating expectations for 42,509.

Analysts have become increasingly pessimistic about Tesla’s impending financial reports for the upcoming quarter. Over recent weeks, analysts have continued to lower their revenue estimates, and expand expected losses for the upcoming quarter. This could result in an overall lapse in reputation of the stock.

Steve Eisman, who was profiled in the book, ‘The Big Short’, commented on Elon Musk in a recent interview with Bloomberg. He described Musk as having execution issues and that he is “nowhere in the autonomous driving industry”.  Tesla’s recent financial standing and inability to execute at times has worried investors, but still there is a large community that wouldn’t dare bet against Elon Musk!

Unlike Facebook, Apple seems to be heading in a steady and consistent positive economic direction. The company is set to report this Tuesday, July 31st for its third quarter (Q3) financials. The earnings per share (EPS) is projected to increase by 34% year over year (YoY), to $2.23 this quarter, from $1.67 in the year ago period. This is a promising sign even as the EPS decreased from Q2 of 2018 by $0.49. The lower EPS values of Q3’s projection can be attributed to what CNET explains as “The June quarter [being] typically Apple’s smallest of the year.” (1)

Similar to the EPS trends, revenue is estimated to increase by 16% YoY to $52.85 billion. It’s quarterly revenue, in comparison to Q2 of 2018 will decrease by $8.29 billion. This statistic is not as worrisome, as the strong YoY growth is a more promising indicator of Apple’s economic success—demonstrating solid growth throughout the year.

Mac and iPad sales are predicted to be virtually the same as last year’s Q3 sales with a YoY of -1% and 0% respectively.

But Apple’s new bet is in its highly anticipated iPhone 9 which is rumoured to be a cheaper alternative to the X. If Apple reveals its newest iPhone in tandem with its Q3 financial report, Apple could be in for a significant stock price increase. Furthermore, Apple’s iPhone sales are projected to increase by 4% YoY, indicating successful growth. Since the iPhone is Apple’s most popular product (in terms of units sold), the increase of sales of this product YoY mitigates the sluggish performances YoY of the mac and iPad.

However, there is some cause for concern. Apple’s gross margins are expected to decrease by 2% YoY. So although Apple’s revenue and EPS are increasing, the amount of per dollar retention is decreasing. This is not a drastic decrease, so there should not be too much worry.

Overall, Apple seems to be in good shape and not in for a massive stock drop such as the one Facebook just recently experienced. Mac and iPad sales are sluggish, but Apple’s big moneymaker, the iPhone, is still trending well. Apple is expected to be a solid investment option with a healthy potential of growth in the near—and far—future.

How do you think Apple will do? Estimate here.

Photo credit: shaeenhaque