Q4 Earnings Could Send Angie’s List (ANGI) Closer to Zero

Advertisement

Before the market opens on Wednesday, Angie’s List Inc (NASDAQ:ANGI) — which operates an online platform for local contractors and businesses — will report its fourth-quarter earnings.

ANGI stock angies list stock angies list saleThe sad fact is that Wall Street is not expecting much. During the year so far, ANGI stock is off 21%. In fact, the return for the past 12 months is a grueling -66%.

Is there any reason for Wall Street to be more hopeful? Perhaps ANGI stock could become a value play?

No doubt, expectations are fairly tepid. The consensus for analysts’ is for ANGI to post an 18% increase in revenues to $81.22 million. To put this into perspective, rival Yelp Inc (NYSE:YELP) reported a 56% jump to $109.9 million in its latest quarter.

As for the bottom line, Wall Street is looking for Angie’s List to report a profit of 22 cents per share, up from 12 cents per share from a year ago. Keep in mind that the company has taken aggressive initiatives to cut back on its expenses. The company should also find economies of scale as it increases its revenue base.

But there is some recent news that should be encouraging for ANGI stock. For example, the company launched a new mobile app, which makes it easier to search for providers and has photo tools to help streamline the project process.

ANGI also has surpassed three million paid members, with the company tripling its numbers in roughly three years.

Problems Plague Angie’s List

However, there are still some nagging issues. For the most part, ANGI stock has seen lots of volatility because of earnings misses during the past year. Besides, the fourth quarter is often soft. Let’s face it, how many people think about doing home projects during the holiday period? Not many.

Angie’s List also must contend with rivals like Yelp, Kudzu and IAC/InterActiveCorp’s (NASDAQ:IACI) HomeAdvisor. Oh, and let’s not forget that Amazon.com, Inc. (NASDAQ:AMZN) recently launched its own service.

But there is something else: ANGI has big problems with its business model. For the most part, the company’s competitors provide free services to consumers, which has helped boost user growth. HomeAdvisor commercials even mock the fact taht ANGI charges its customers!

Now again, the expectations for the company’s Q4 report is soft, so there’s decent room for an earnings beat. And ANGI stock could potentially get a lift from a short squeeze as investors buy back stock to cover their short positions. Consider that the short interest is at a hefty 39%.

But it seems the best play for ANGI is for a quick trade. Given the competition and dicey business model, investors should not hold on for the long haul.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

More From InvestorPlace

Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.


Article printed from InvestorPlace Media, https://investorplace.com/2015/02/q4-earnings-send-angies-list-angi-closer-zero/.

©2024 InvestorPlace Media, LLC