Wall Street experts analyze various macro, sector, and company-specific factors to build their estimates for a company’s quarterly performance. One such aspect that is increasingly being monitored, especially for companies with online sales channels, is their website traffic.
Amid increasing digitization and heightened focus on online channels, trends in website traffic help us gauge the interest in a company’s products and service offerings.
TipRanks’ Website Traffic Tool uses data from SEMrush Holdings (SEMR), the world’s largest website usage monitoring service, to provide an estimate of website visits over a particular period. We used this tool to assess the website traffic for PayPal and Domino’s ahead of their first-quarter results.
PayPal Holdings (NASDAQ: PYPL)
Shares of payment processing giant PayPal have crashed 53.5% year-to-date. They tanked 25% on February 2 in reaction to mixed Q421 results and weak guidance.
PayPal forecast a nearly 29% decline in Q122 adjusted EPS to $0.87 and about a 6% growth in revenue on a spot and foreign exchange-neutral basis. Analysts expect Q122 adjusted EPS to decline 28% to $0.88 and revenue to grow 6.2% to $6.41 billion.
The company’s full-year revenue guidance indicated growth of 15%-17%, and adjusted EPS between $4.60-$4.75 compared to $4.60 in 2021.
PayPal cited several reasons for a weaker-than-expected outlook, including tough comparisons, a deceleration in e-commerce growth, weakness in consumer spending in its lower-income cohorts due to inflationary pressures, supply chain issues, and the migration of eBay to its own managed payment system.
Ahead of the Q1 print (scheduled for April 27), Morgan Stanley analyst James Faucette stated, “While there’s a chance PYPL could shift their ’22 revenue growth outlook to the low-end of the 15-17% range, as some investors expect, we believe that would be largely related to slower than expected growth in broader ecommerce vs. more PYPL-specific factors.”
Faucette reiterated a Buy rating and a price target of $190 on PayPal.
Overall, the Street is cautiously optimistic about PayPal, with a Moderate Buy consensus rating based on 29 Buys, 10 Holds, and one Sell. The average PayPal price target of $167.86 suggests 91.23% upside potential from current levels.
TipRanks’ Website Traffic tool indicates that in Q122, total estimated visits on the PayPal website grew 125.81% on a year-over-year basis. Also, website traffic increased 20.75% in Q122 compared to Q421. This indicates a slowdown compared to the 23.82% quarterly growth in website traffic seen in Q421.
Domino’s Pizza (NYSE: DPZ)
Shares of Domino’s have plunged about 33% so far this year on concerns over a slowdown in business momentum as pandemic tailwinds fade. Last month, the company announced its Q4 FY21 (ended January 2, 2022) results, which missed Wall Street’s expectations.
Domino’s Q4 FY21 revenue declined 1% to $1.34 billion due to adverse currency fluctuations and staffing challenges faced by the company’s U.S. operations, particularly in the delivery business. Adjusted EPS grew about 23% to $4.25, reflecting the benefit of a lower share count resulting from the company’s share repurchases.
Domino’s is expected to announce its Q1 FY22 results on April 28. While the company didn’t provide any specific guidance, it stated that it expects Q4 FY21 headwinds to continue in the first quarter. Moreover, increased commodity costs and higher inflation are expected to impact profitability.
Analysts expect Q1 FY22 revenue to grow 4.6% to $1.03 billion and adjusted EPS to rise 2.7% to $3.08.
Heading into the Q1 earnings, UBS analyst Dennis Geiger lowered his price target on Domino’s to $430 from $475 and maintained a Hold rating. Geiger feels that staffing challenges and macro pressures might have persisted in Q1 and impacted Domino’s sales trends.
That said, Geiger believes that the second half of the year could witness better momentum backed by improved staffing and driver levels coupled with higher pricing.
Overall, Domino’s scores a Moderate Buy consensus rating based on nine Buys, 13 Holds, and one Sell. The average Domino’s price target of $456.50 implies 20.72% upside potential from current levels.
TipRanks’ Website Traffic tool indicates that in Q122, total estimated visits on Domino’s website grew 101.22% on a year-over-year basis. Further, website traffic increased 16.07% in Q122 on a quarter-over-quarter basis, marking an improvement from the 7.29% growth seen in Q421, possibly as a result of the Omicron outbreak. Management might shed some light on this in the upcoming conference call.
Assessing website traffic data might be beneficial as online ordering has recently gained prominence in the food industry. Over half of Domino’s global retail sales in FY21 came from digital channels.
Conclusion
While several analysts continue to believe in PayPal’s growth story, they remain cautious due to multiple near-term headwinds, including a slowdown in spending due to inflationary pressures and the impact of geopolitical tensions. TipRanks’ Website Traffic Tool indicates a slowdown in Q122 website traffic growth on a sequential basis.
Persistent labor challenges, the absence of stimulus packages and unemployment benefits, which boosted consumer demand last year, and inflation are expected to be a drag on Domino’s Q1 FY22 results. Meanwhile, website traffic trends for Q122 look more favorable for Domino’s.
Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash.
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