Roku Reports Q3 Loss, Tops Revenue Estimates

Roku (ROKU - Free Report) has announced a quarterly loss of $0.06 per share, which is significantly better than the Zacks Consensus Estimate predicting a loss of $0.35. This marks an improvement from a loss of $2.33 per share reported during the same quarter last year. Notably, these figures take into account adjustments for non-recurring items.

With an earnings surprise of 82.86%, Roku's performance stands out. Just a quarter earlier, expectations were set for a loss of $0.45 per share, yet the company managed to post an actual loss of only $0.24, representing a surprising outcome of 46.67%.

In the past four quarters, Roku has consistently exceeded consensus EPS estimates, showing a strong trend in its earnings report.

For the quarter ending in September 2024, Roku reported revenues of $1.06 billion, surpassing the Zacks Consensus Estimate by 4.37%. This is an increase compared to the $912.02 million revenue recorded in the same quarter the previous year. Like its earnings, Roku has also beaten consensus revenue expectations in all four of the last quarters.

The future movement of Roku's stock price will rely heavily on management's insights during the upcoming earnings call. This will help investors gauge the sustainability of these results and future earnings expectations.

Since the beginning of 2024, Roku shares have decreased by approximately 16.6%, contrasting sharply with the S&P 500, which has gained 22.3% over the same period.

What Lies Ahead for Roku?

As Roku's performance has lagged behind the market in recent months, investors are left wondering what the future holds for the stock.

While there aren't straightforward answers to this question, examining the company's earnings outlook is a reliable method for gauging future performance. This outlook encompasses not just the current consensus earning estimates for upcoming quarters, but also how those estimates have shifted in recent times.

Research demonstrates a strong link between stock price movements and trends in earnings estimate revisions. Investors can monitor these changes independently or utilize a respected rating tool like the Zacks Rank, which has a reliable history of effectively interpreting earnings estimate revisions.

Leading up to this earnings release, the trend for Roku's estimate revisions has been positive. While the revisions could fluctuate as a result of the latest earnings report, the current trend has led to a strong Zacks Rank of #1 (Strong Buy) for the stock, suggesting that its shares may perform well in the near term.

It will be intriguing to see how future estimates for the upcoming quarters and the current fiscal year will adjust in the following days. At present, the consensus EPS estimate stands at -$0.48 on projected revenues of $1.11 billion for the upcoming quarter, and -$1.42 on $3.98 billion in revenues for the full fiscal year.

Investors should also consider that the overall industry outlook could significantly affect Roku's stock performance. At present, the Broadcast Radio and Television sector, to which Roku belongs, ranks in the bottom 25% of over 250 Zacks industries. Historical data shows that the upper half of ranked industries tend to outperform the lower half by a margin of more than two to one.

Another player in the same industry, fuboTV Inc. (FUBO - Free Report), is yet to announce its results for the quarter that ended in September 2024, with the forecasted reports due on November 1.

For its expected report, fuboTV is anticipated to post a quarterly loss of $0.12 per share, reflecting a year-over-year improvement of +45.5%. Meanwhile, the consensus EPS estimate for fuboTV has remained constant over the last month, with revenue projections set at $377.62 million, which would be a 17.7% increase compared to the previous year.

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