Peloton Interactive, Inc. PTON is scheduled to report third-quarter fiscal 2021 results on May 6, after market close. In the last reported quarter, the company delivered an earnings surprise of 80%.

How Are Estimates Placed?

The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at a loss of 11 cents per share, which indicates improvement of 45% from a loss of 20 cents reported in the year-ago quarter.

For revenues, the consensus mark is pegged at nearly $1.11 billion, which suggests a surge of 112.4% from the prior-year quarter’s figure.

Peloton Interactive, Inc. Price and EPS Surprise
Peloton Interactive, Inc. price-eps-surprise | Peloton Interactive, Inc. Quote

Let's take a look at how things have shaped up in the quarter.

Factors at Play

Peloton’s fiscal third-quarter performance is likely to have benefitted from a surge in demand for its in-house exercise equipments like Bike and Bike+. This along with increased production and expedited transportation of its products is likely to have boosted fiscal third-quarter top line. Notably, the company anticipates higher sales on the back of reduced prices and higher acceptance for Bike+.

Moreover, increased focus on extending manufacturing base with related shipment and delivery, innovation for its fitness product portfolio and new digital content is likely to have driven fiscal third quarter top-line. For the fiscal third quarter, the company anticipates total revenues of $1.1 billion that suggests growth of 110% year over year.

Meanwhile, the company is optimistic about its connected fitness subscribers and digital products. As of Dec 31,2020, the company had over 4.4 million global members inclusive of nearly 625,000 digital subscribers. Going forward, the company expects digital subscriptions to be a major growth driver for connected fitness products on the back of new fitness modalities and class varieties. For the quarter under review, the company expects subscriber count of 1.98 million, which suggests growth of 123% year over year.

However, port congestion issues and COVID-related delivery challenges are likely to have negatively impacted product delivery windows during the fiscal third quarter. This along with expenses related to air shipments, expedited ocean freight and container costs is likely to have hurt margins in the to-be-reported quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Peloton this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. But that's not the case here.

Earnings ESP: Peloton has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Peloton, currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock With Favorable Combinations

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Fox Corporation FOXA has a Zacks Rank #1 and an Earnings ESP of +13.40%.

Choice Hotels International, Inc. CHH has a Zacks Rank #3 and an Earnings ESP of +17.47%.

PlayAGS, Inc. AGS has a Zacks Rank #3 and an Earnings ESP of +25.75%.

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Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report

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Peloton Interactive, Inc. (PTON) : Free Stock Analysis Report

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