Juniper Networks (JNPR) Q2 Earnings: Stock To Surprise?

Juniper Networks, Inc. (NYSE:JNPR) is set to report second-quarter 2016 results on Jul 26. Last quarter, the company posted a negative earnings surprise of 13.79%. However, the company has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters, bringing the average positive surprise to 9.06%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Juniper is a leading provider of networking solutions and communication devices. We are encouraged by the company’s product launches, cost reduction initiatives and improving execution. Also, Juniper’s expansion into the software-defined network segment should positively impact its results in the to-be-reported quarter.

Nonetheless, an uncertain global macro environment and anticipation of potentially weak investment patterns among customers keep us from being too optimistic about the stock’s near-term performance.

Notably, the company’s last quarterly results were quite disappointing, with both the top and bottom line falling short of the Zacks Consensus Estimate. The company had cited soft demand from enterprises and delayed gear deployments by telecom companies as the reason behind the dismal performance.

The scenario has not changed much since then, which makes us apprehensive of the same headwinds continuing to hurt Juniper’s performance in the second quarter too.

Earnings Whispers

Our proven model does not conclusively show that Juniper Networks will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Juniper has an Earnings ESP of 0.00% since both the Most Accurate estimate stands in line with the Zacks Consensus Estimate of $1.66.

Zacks Rank: Juniper carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stock to Consider

Here are a few companies that you may consider as they has the right combination of elements, according to our model, to post an earnings beat this quarter:

Open Text Corp. (NASDAQ:OTEX) , with an Earnings ESP of +1.10% and a Zacks Rank #1.

Diebold, Incorporated (NYSE:DBD) , with an Earnings ESP of +5.00% and a Zacks Rank #2.

Boyd Gaming Corporation (NYSE:BYD) , with an Earnings ESP of +3.33% and a Zacks Rank #2.