Xoom Corporation's (XOOM) Q2 Earnings: What to Expect?

Xoom Corporation XOOM is expected to report second-quarter 2015 earnings results on Jul 28, 2015. Last quarter, it posted a 50% positive earnings surprise. Let us see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

Xoom has been consistently upgrading its money transfer services through a number of initiatives that should help it retain active customers as well as gain new ones. Last quarter, the company began offering instant deposits in Sri Lanka through its collaboration with Sampath Bank. Also, the company started providing bank deposit services to other banks in Sri Lanka that include Hatton National Bank, Bank of Ceylon, Peoples Bank, Commercial Bank, and more.

With its foray into Sri Lanka, Xoom's money transfer service has now expanded to 33 countries worldwide. Additionally, the company strengthened its operations in Vietnam by adding same-day home delivery, instant cash pickup, and fast bank deposits in its portfolio at Vietnam through the collaboration with Sacombank.

These transactions have strengthened the company's global operations and should generate more revenues, thereby positively influencing the bottom line.

However, increased costs and operating losses raise caution. Xoom expects expenditures in business development and marketing, technology infrastructure, and general and administrative expenses to increase. This should weigh on earnings to some extent. Moreover, given that a substantial part the company's of revenues is generated from regions where the payout currency is other than U.S. dollars, Xoom's earnings remain vulnerable to foreign currency fluctuation.

Earnings Whispers

Our proven model does not conclusively show that Xoom is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Xoom has an ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 1 cent per share.

Zacks Rank: Xoom holds a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks from the finance sector which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:  

CME Group Inc. CME with an Earnings ESP of +1.10% and a Zacks Rank #2.

American Financial Group Inc. AFG with an Earnings ESP of +6.61% and a Zacks Rank #3 (Hold).

American International Group, Inc. AIG with an Earnings ESP of +3.31% and a Zacks Rank #3.

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XOOM CORP XOOM: Free Stock Analysis Report
 
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AMER FINL GROUP AFG: Free Stock Analysis Report
 
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