Overstock Earnings Preview - Second Quarter 2008

Overstock.com (OSTK: 14.88 +1.50%) is scheduled to report Q208 results before the market opens on July 18. Despite the economic headwinds facing online retailers, we at eChristianInvesting are expecting OSTK’s results to exceed the consensus expectations. 

We are forecasting revenues of $184M versus analyst consensus of $181M. This would represent 23% growth over last year’s revenues of $149M in the same period.

Although we expect that traffic levels fell sequentially during the quarter after an impressive first quarter performance, our checks continue to show very strong y/y growth. This is largely due to some very favorable 2007 comps. In addition, the receipt of government stimulus checks beginning in May should have provided a late surge in the quarter.

Overstock’s shares have been one of the biggest stars of the markets this year. To date, the shares have appreciated over 78% versus a 14% drop in the broader market indexes. Of course the big run-up in the stock price came after last quarter’s impressive results.

Shares are now trading at 0.6x consensus 2009 revenue estimates. Our believe is that these estimates will probably be revised downwards in the coming months to better incorporate the macro concerns facing online retailers. Therefore, we continue to remain on the sidelines in regards to valuation of this stock despite the potential short-term upside.