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Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The Zacks Consensus Estimate for earnings is pegged at 33 cents per share, which has remained unchanged in the past 60 days. The consensus mark implies a 57.1% increase from the year-ago actual. The Zacks Consensus Estimate for revenues is pegged at $194.1 million, indicating growth of 21% year over year.
Clear Secure’s Estimate Movement
Image Source: Zacks Investment Research
Clear Secure has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 56.7%. In the last reported quarter, it delivered an earnings surprise of 30.8%.
YOU’s Earnings Surprise History
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model doesn’t conclusively predict an earnings beat for Clear Secure this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as elaborated below.
Earnings ESP: YOU has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 33 cents per share. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Factors Likely to Have Shaped Quarterly Performance
Strong growth in subscriptions to Clear Secure’s consumer aviation service, CLEAR Plus, is expected to have augmented its revenues in the third quarter. An increase in booking level, driven by new member enrollments, strong retention of existing members and effective pricing, is expected to have boosted its sales. Solid booking levels, driven by positive responses from the rollout of the company’s TSA PreCheck program, are likely to have been a tailwind.
The company’s strategic distribution partnerships with several companies, including Delta Air Lines, United Airlines, Hawaiian Airlines, Alaska Airlines and American Express, have been promoting its services to customers on a discounted basis. This has been enabling YOU to efficiently scale membership in CLEAR Plus. Importantly, no individual airport accounts for more than 10% of its membership revenues, reflecting its core competencies and well-balanced portfolio.
Clear Secure has been also witnessing impressive growth in CLEAR Verified enrollments, which has been driving the number of total cumulative platform uses. For instance, exiting the second quarter, YOU’s total cumulative enrollments totaled 24,221,000, which reflected a 39% increase on a year-over-year basis. The benefits of increase in the number of enrollments and its well-balanced portfolio are likely to reflect in its third-quarter results.
As part of its footprint expansion initiatives, the company has been expanding its identity and protection services to other industries. Its focus on expanding its technology platform beyond airports to other lucrative markets like health care and financial services, while adding new features such as digital payments is also likely to have boosted its performance.
Despite the positives, YOU has been coping with the adverse impacts of increased operating costs due to rising fixed airport fees and high sales and marketing expenses. For instance, in the first six months of 2024, its cost of revenue share fee increased 24% year over year, while sales and marketing expenses rose 11%. Also, costs related to direct salaries and benefits increased 19% over the same time frame.
Given’s the company’s extensive geographic presence, its operations are subject to certain uncertainties in the global macroeconomic environment, especially those related to politics, labor market and economic instability. A stronger U.S. dollar is also likely to have hurt its overseas business.
Price Performance & Valuation
YOU’s shares have exhibited an uptrend in the past three months, outperforming its peers and the Zacks Internet - Software industry. The stock has surged 89.2%, outperforming the industry’s and the S&P 500’s growth of 19.9% and 10.6%, respectively. The company’s peers Box, Inc. (BOX - Free Report) and Twilio Inc. (TWLO - Free Report) have gained 22.5% and 41.6%, respectively, in the same period.
YOU Outperforms Industry, S&P 500 & Peers
Image Source: Zacks Investment Research
With a forward 12-month price-to-earnings ratio of 24.51X, which is below the industry average of 33.34X, YOU stock presents an attractive valuation for investors. Also, the stock is undervalued compared with its peer, Palo Alto Networks, Inc. (PANW - Free Report) , which is trading at 55.93X.
Price-to-Earnings (Forward 12 Months)
Image Source: Zacks Investment Research
Investment Thesis
YOU’s well-balanced product portfolio, along with strong growth in subscriptions to its consumer aviation service and strategic distribution partnerships, is likely to drive its growth. The company’s initiatives to expands its footprint to lucrative industries like health care and financial services also bode well. Its commitment to rewarding its shareholders handsomely through dividend payments and share buybacks adds to its strength.
However, escalating operating costs owing to increase in fixed airport fees and high sales and marketing expenses remain concerning for its margin performance.
Final Thoughts
Despite being attractively valued and having strong fundamentals, Clear Secure has been witnessing some near-term challenges.
Investors should monitor the developments pertaining to the stock closely for a more appropriate entry point, as an erroneous and hasty decision could affect portfolio gains. Therefore, it might be prudent to wait for YOU’s earnings report before making an investment decision.
However, those who already own this stock may stay invested as the company's strong estimates, robust share price returns and strength in its business offer solid long-term prospects.
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Clear Secure Stock Before Q3 Earnings: To Buy or Not to Buy?
Clear Secure, Inc. (YOU - Free Report) is scheduled to release third-quarter 2024 results on Nov. 7, before market open.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The Zacks Consensus Estimate for earnings is pegged at 33 cents per share, which has remained unchanged in the past 60 days. The consensus mark implies a 57.1% increase from the year-ago actual. The Zacks Consensus Estimate for revenues is pegged at $194.1 million, indicating growth of 21% year over year.
Clear Secure’s Estimate Movement
Image Source: Zacks Investment Research
Clear Secure has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 56.7%. In the last reported quarter, it delivered an earnings surprise of 30.8%.
YOU’s Earnings Surprise History
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model doesn’t conclusively predict an earnings beat for Clear Secure this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as elaborated below.
Earnings ESP: YOU has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 33 cents per share. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company presently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
CLEAR Secure, Inc. Price and EPS Surprise
CLEAR Secure, Inc. price-eps-surprise | CLEAR Secure, Inc. Quote
Factors Likely to Have Shaped Quarterly Performance
Strong growth in subscriptions to Clear Secure’s consumer aviation service, CLEAR Plus, is expected to have augmented its revenues in the third quarter. An increase in booking level, driven by new member enrollments, strong retention of existing members and effective pricing, is expected to have boosted its sales. Solid booking levels, driven by positive responses from the rollout of the company’s TSA PreCheck program, are likely to have been a tailwind.
The company’s strategic distribution partnerships with several companies, including Delta Air Lines, United Airlines, Hawaiian Airlines, Alaska Airlines and American Express, have been promoting its services to customers on a discounted basis. This has been enabling YOU to efficiently scale membership in CLEAR Plus. Importantly, no individual airport accounts for more than 10% of its membership revenues, reflecting its core competencies and well-balanced portfolio.
Clear Secure has been also witnessing impressive growth in CLEAR Verified enrollments, which has been driving the number of total cumulative platform uses. For instance, exiting the second quarter, YOU’s total cumulative enrollments totaled 24,221,000, which reflected a 39% increase on a year-over-year basis. The benefits of increase in the number of enrollments and its well-balanced portfolio are likely to reflect in its third-quarter results.
As part of its footprint expansion initiatives, the company has been expanding its identity and protection services to other industries. Its focus on expanding its technology platform beyond airports to other lucrative markets like health care and financial services, while adding new features such as digital payments is also likely to have boosted its performance.
Despite the positives, YOU has been coping with the adverse impacts of increased operating costs due to rising fixed airport fees and high sales and marketing expenses. For instance, in the first six months of 2024, its cost of revenue share fee increased 24% year over year, while sales and marketing expenses rose 11%. Also, costs related to direct salaries and benefits increased 19% over the same time frame.
Given’s the company’s extensive geographic presence, its operations are subject to certain uncertainties in the global macroeconomic environment, especially those related to politics, labor market and economic instability. A stronger U.S. dollar is also likely to have hurt its overseas business.
Price Performance & Valuation
YOU’s shares have exhibited an uptrend in the past three months, outperforming its peers and the Zacks Internet - Software industry. The stock has surged 89.2%, outperforming the industry’s and the S&P 500’s growth of 19.9% and 10.6%, respectively. The company’s peers Box, Inc. (BOX - Free Report) and Twilio Inc. (TWLO - Free Report) have gained 22.5% and 41.6%, respectively, in the same period.
YOU Outperforms Industry, S&P 500 & Peers
Image Source: Zacks Investment Research
With a forward 12-month price-to-earnings ratio of 24.51X, which is below the industry average of 33.34X, YOU stock presents an attractive valuation for investors. Also, the stock is undervalued compared with its peer, Palo Alto Networks, Inc. (PANW - Free Report) , which is trading at 55.93X.
Price-to-Earnings (Forward 12 Months)
Image Source: Zacks Investment Research
Investment Thesis
YOU’s well-balanced product portfolio, along with strong growth in subscriptions to its consumer aviation service and strategic distribution partnerships, is likely to drive its growth. The company’s initiatives to expands its footprint to lucrative industries like health care and financial services also bode well. Its commitment to rewarding its shareholders handsomely through dividend payments and share buybacks adds to its strength.
However, escalating operating costs owing to increase in fixed airport fees and high sales and marketing expenses remain concerning for its margin performance.
Final Thoughts
Despite being attractively valued and having strong fundamentals, Clear Secure has been witnessing some near-term challenges.
Investors should monitor the developments pertaining to the stock closely for a more appropriate entry point, as an erroneous and hasty decision could affect portfolio gains. Therefore, it might be prudent to wait for YOU’s earnings report before making an investment decision.
However, those who already own this stock may stay invested as the company's strong estimates, robust share price returns and strength in its business offer solid long-term prospects.