Groupon (GRPN) Falls More Steeply Than Broader Market: What Investors Need to Know

Groupon (GRPN) recently underperformed the broader market, with shares falling 2.02% daily and 12.88% over the past month. Despite a projected 96.97% decline in quarterly EPS to $0.01 on $121.88 million in revenue, analysts forecast a 152.98% full-year EPS increase to $0.8, leading to a Zacks Rank #1 (Strong Buy) and a 31.11% rise in the consensus EPS estimate over the last month. However, GRPN's Forward P/E of 28.49 trades at a premium to its industry average of 21.61.

Analysis

Groupon (GRPN) presents a significant disconnect between its recent stock performance and its forward-looking analyst outlook. The stock has demonstrated considerable weakness, falling 12.88% in the past month and 2.02% in the latest session, substantially underperforming the S&P 500. This bearish momentum is set against a challenging near-term earnings forecast, with consensus estimates projecting a 96.97% year-over-year collapse in quarterly EPS to $0.01, despite an expected 6.47% rise in revenue. However, the investment thesis is driven by a starkly contrasting full-year projection, where analysts anticipate a 152.98% surge in EPS to $0.80. This optimism is reinforced by a 31.11% upward revision in the Zacks Consensus EPS estimate over the last month, culminating in a Zacks Rank of #1 (Strong Buy). This suggests a potential turnaround story, though the stock's forward P/E ratio of 28.49 already reflects a premium compared to the industry average of 21.61, indicating high expectations are priced in.

Key Decisions for Investors

• Investors should weigh the stark contrast between Groupon's recent negative stock performance and the highly bullish analyst outlook for the full year, recognizing this as a potential high-risk, high-reward turnaround play.
• The upcoming earnings report is a critical catalyst; focus should be on management's full-year guidance and commentary on margin recovery rather than the headline quarterly EPS, which is expected to be minimal.
• Given the stock's premium forward P/E of 28.49, which is above its industry average, a failure to deliver on the lofty full-year earnings growth of +152.98% could lead to a significant price correction.