Chicago-based Groupon (GRPN – Analyst Report) was a hot commodity when shares of the company hit the market several years ago. Investors flocked to this coupon company which was one of the quickest growing firms of all time, at least when you look at time to reach $1 billion in revenues. In fact, Groupon accomplished this impressive feat in just 2.25 years, beating out titans like Priceline.com, or even Amazon.
But as the company went public, competition increased and demand for groupons began to fade. Shares of GRPN are actually down more than 70% since their IPO and founder Andrew Mason was forced out as CEO to boot.
Promise on the Horizon?
Yet despite these setbacks, GRPN is finally starting to look like a decent pick at these levels. The company is riding an earnings winning streak of four straight quarters, including an average surprise over this time frame of 91%.
Analysts also seem to be a bit more bullish on the company’s prospects, both in the near term and the longer term. For this quarter, four estimates have moved higher in the past week compared to zero lower, while we have not seen any downward revisions for either the current year or next year time frames.
These recent estimates are actually looking for GRPN to get out of its money losing phase and to turn a profit this year. This is pretty incredible as 90 days ago the consensus called for full year EPS of -0.09 though the most accurate estimate is now looking for three cents per share in profit instead.
Thanks to these factors, GRPN has earned itself a Zacks Rank #1 (Strong Buy) and we are looking for good things out of this company when it reports earnings on May 5th. But beyond earnings estimates, GRPN actually has a few other promising points to focus in on as well.
If the earnings estimates weren’t enough for you, consider that GRPN also has ‘A’ Ranks for both its Growth and Momentum style scores. This puts the stock in pretty rare company, and it is especially hard to find when combined with the coveted Zacks #1 Rank.
GRPN has these high ranks thanks to a couple of factors. For growth, GRPN’s expected EPS growth easily crushes the industry average of 12.6%, while its low debt/capital level (zero) suggests great flexibility for the company. Meanwhile, for momentum, EPS estimates are surging across all time periods when compared to the industry, and this is what is driving GRPN’s top rank on this front too.
Although Groupon has faced significant trouble in the past, there is reason to believe that those issues are staying behind the company. GRPN is now riding an earnings hot streak, and analysts are starting to bump up their estimates as well.
Take this into account with some of the impressive growth and momentum factors, and it is hard not to like GRPN right now. So though the stock is trading at a discount, earnings are right around the corner and the sale price for GRPN shares might be ending very soon.
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