OpenTable Inc. (NASDAQ:OPEN) is set to report FQ1 2014 earnings after the market closes on Thursday, May 1st. OpenTable is a restaurant technology app which offers a best in class mobile experience on 1 well defined niche. OpenTable specializes in letting users see restaurant availabilities and book reservations. The company charges restaurants a monthly fee to be listed and an additional charge on a per booking basis. On Thursday the Estimize community is expecting OpenTable to follow suit with Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), and Yelp (NYSE:YELP) by reporting better-than-expected earnings. Here's what the investors and independent analysts expect from OpenTable.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for OpenTable to report 42c EPS and $54.34M revenue while the current Estimize.com consensus from 13 Buy Side and Independent contributing analysts is 46c EPS and $54.61M in revenue. This quarter the buy-side, as represented by the Estimize.com community, is expecting OpenTable to beat the Wall Street consensus on EPS by a considerable margin while coming in a few hundred thousand dollars ahead on sales.
Over the past 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting OpenTable's EPS every time and has been more accurate in predicting revenue 3 times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non-professional investors, Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time, but more importantly, it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a wider differential between the two groups' expectations on EPS with almost no difference in revenue forecasts.
The distribution of estimates published by analysts on the Estimize.com platform range from 43c to 53c EPS and from $54.27M to $55.25M in revenues. This quarter we're seeing a wide range of estimates on OpenTable's EPS and a narrow range of estimates on revenue.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of EPS estimates signals less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter Wall Street lowered its EPS consensus for OpenTable from 54c to 42c while the Estimize consensus fell from 54c to 46c. Meanwhile, the Wall Street revenue consensus inched higher from a low of $54.26M to $54.34M while the Estimize consensus perked up from $54.45M to $54.61M. Timeliness is correlated with accuracy and often a leading indicator, at the end of the quarter we saw falling EPS estimates and upward revenue forecasts.
The analyst with the highest estimate confidence rating this quarter is turbinecity who projects 44c EPS and $54.49M in revenue. turbinecity was our Winter 2014 season winner and is ranked 3rd overall among over 4,350 contributing analysts. Over the past 2 years turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 54% of the time respectively throughout over 2000 estimates. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, turbinecity is expecting OpenTable to report right between the expectations of Wall Street and the Estimize community.
Wall Street expects OpenTable's FQ1 EPS to fall from 45c last year to 42c this quarter while the Estimize community is looking for a much better report of 46c, representing a year over year increase of 1c per share in earnings. On the revenue side, contributing analysts on the Estimize platform are expecting an in line report. Fundamentals have been much better than expected so far this earnings season from the social tech companies, but many of the stocks have still have sold off over fears of declining user base growth and potentially limited opportunities for future revenue. In addition to earnings, OpenTable's user numbers and engagement metrics will be critical to watch.
Disclosure: No positions