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Groupon (GRPN) Looks Promising: Should You Buy the Stock?

A successful investor understands the importance of adding well-performing stocks in the portfolio at the right time. Notably, indicators of a stock’s bullish run include a rise in share price and strong fundamentals.

Groupon Inc. GRPN is one such technology stock that has been on healthy growth trajectory, of late. The company’s shares have returned 31.8% year to date, substantially outperforming the 16.9% rally of the industry.

Let’s delve deeper and take a look at some of the factors aiding the performance.

Positive Earnings Surprise History

Groupon has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 150%.

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Further, it has a long-term expected EPS growth rate of 7%.

Upward Estimate Revisions

In the last 60 days, the Zacks Consensus Estimate for Groupon’s current year witnessed upward revisions. The Zacks Consensus Estimate for current year is pegged at 13 cents per share compared with 12 cents projected 60 days ago.

Valuation Looks Impressive

On the valuation front too, the stock looks attractive. The company currently trades at a forward P/E multiple of 38.8x, significantly lower than the Zacks industry’s average of 61.0x. The ratio, which is obtained by dividing a stock’s current market price with its historical or estimated earnings, measures how much an investor needs to shell out per dollar of earnings. Therefore, the lower the P/E of a stock, the better it is for a value investor.

Other Driving Factors

The company’s new offering Groupon+ has been well accepted and its integration with Mastercard is also complete. This is expected to be a catalyst going ahead. It is currently operating in 23 markets.

Groupon’s partnership with Grubhub in the month of July which enables customers to order food delivery from around 55,000 restaurant partners of Grubhub via Groupon platform is expected to be a tailwind.

The company’s policy of launching new products on a regular basis is a positive. Its strategy of offering special deals prior to important events, like Thanksgiving, enhances popularity.

Management is particularly positive about the company’s offline campaigning and brand awareness programs, which have aided revenue growth. With a proper mix of products along with accelerating consumer activities, we anticipate growth going forward.

Bottom Line

Looking at these positives, we believe that Groupon is one technology stock that deserves a place in investors’ portfolio.

Thus, investing in this stock can yield returns in the short term.

Zacks Rank & Other Key Picks

Groupon sports a Zacks Rank #1 (Strong Buy).

NVIDIA Corporation NVDA, DXC Technology Company DXC and Analog Devices, Inc. ADI are some other top-ranked stocks in the same sector. All the three companies flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA, DXC and Analog Devices have a long-term earnings growth rate of 10.3%, 10.5% and 10.4%, respectively.

More Stock News: This Is Bigger than the iPhone!                  

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. 

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Groupon, Inc. (GRPN) : Free Stock Analysis Report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Analog Devices, Inc. (ADI) : Free Stock Analysis Report
 
DXC Technology Company. (DXC) : Free Stock Analysis Report
 
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