Tuesday, March 18, 2014

Don’t Give Up on Groupon

This article was originally published by GuruFocus 

By Sarfaraz A. Khan, Research assistant: Gohar Yousuf
Groupon (GRPN) has recently released its quarterly results in which it managed to beat market’s estimates, but the company’s shares are down 26% this year. Moreover, RBC and Credit Suisse have exacerbated the situation by downgrading the stock. Despite the pessimism, there were several positives in Groupon’s earnings.

In the final quarter of 2013, Groupon’s revenues increased 20.4% from the previous year to $768.4 million, which was better than analysts’ expectations of $718 million. The business swung from an operating loss of $12.86 million in fourth quarter 2012 to an operating profit of $13.35 million. Groupon, however, still posted a net loss of $81.2 million, or $0.12 per share, which is flat from the prior year’s results. Excluding one-off items, this translated into adjusted profit of $0.04 per share, which was also above analysts' estimate of $0.02 per share.

Turnaround in EMEA Region

In North America, the company’s revenues climbed 18.2% to $443 million while in EMEA region, it recorded growth of 42.5% to $251 million. This solid growth easily offset the 15.2% decline in revenues from the rest of the world to $73.4 million.

During the previous quarter, Groupon witnessed 5% year-over-year growth in worldwide gross billing to $1.6 billion. Gross billings reflect the total amount collected from customers and is one of the key metrics to determine the growth of the company. Compared to the previous quarter, the gross billings growth in North America ... read full article at GuruFocus