What happened
Shares of Qurate Retail (QRTEA -1.94%) surged today after the parent of QVC and the Home Shopping Network delivered a strong third-quarter earnings report.
The stock finished the day up 17.7%.
Image source: Getty Images.
So what
Qurate has done well during the COVID-19 pandemic as its home-shopping platforms, which include flash e-sales site Zulily, are well suited for the current environment. Sales in the third quarter rose 10% to $3.38 billion, topping estimates of $3.25 billion, as the company saw solid growth across all of its brands. E-commerce revenue increased 15% to $2.1 billion and now makes up 62% of total revenue, though that growth rate is actually underperforming the overall industry.
Bottom-line performance was strong as its business segments gained leverage. Operating income before depreciation and amortization (OIBDA) was up 24% to $566 million, and adjusted earnings per share rose 36% from $0.42 to $0.57, ahead of the analyst consensus at $0.44.
CEO Mike George said of the quarter, "Our performance was outstanding this quarter. We generated strong growth in revenue, OIBDA, free cash flow and new customers, reflecting broad-based strength in home-related products."
In a sign of confidence, the company also paid a special dividend of $1.50 per share in the quarter, or close to a 20% yield. It also issued a preferred stock dividend of $3.00.
Now what
Qurate didn't offer guidance in its earnings release, but George made another interesting comment about the company's future: "Qurate Retail offers a unique blend of media assets, particularly our leadership in livestreaming, and retail core competencies centered on curating appealing merchandise and building loyal customer relationships through highly engaging content." Indeed, the company's experience with video and livestreaming could give it an edge as e-commerce and video become more intertwined. This trend is already happening in social media.
That, alongside a dirt-cheap price-to-earnings valuation, makes the stock a unique value option in e-commerce.
