NetApp Inc. (NASDAQ:NTAP) is set to report fourth-quarter fiscal 2016 results on May 25. Last quarter, the company’s earnings of 52 cents came in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Factors to Consider
NetApp reported dismal results for the fiscal third quarter, wherein both the top and the bottom line compared unfavorably with the year-ago levels. Also, the company provided a tepid revenue guidance for the fourth quarter considering persistent uncertainty in global IT spending and unfavorable exchange rates.
Nonetheless, the company is expected to witness momentum in flash-based solutions with the newly introduced all-flash array, which will help it to gain traction in the storage market. Recent product launches and refreshes will drive revenues, while stringent cost controls will facilitate margin expansion over the long run.
However, the recent forecast for worldwide IT spending by Gartner raises concerns about NetApp’s near-term performance. Competition from EMC Corp (NYSE:EMC). and HP Inc. (NYSE:HPQ) add to its woes.
Earnings Whispers
Our proven model does not conclusively show that NetApp will beat earnings this quarter. This 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. However, that is not the case here, as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, currently stands at 0.00%. This is because the Most Accurate estimate of 40 cents is in line with the Zacks Consensus Estimate.
Zacks Rank: NetApp’s Zacks Rank #3, 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.
Stocks to Consider
Here are a couple of stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
TiVo Inc. (NASDAQ:TIVO) , with an Earnings ESP of +25.00% and a Zacks Rank #1.
Intuit Inc. (NASDAQ:INTU) , with an Earnings ESP of +0.66% and a Zacks Rank #2.
HP INC (HPQ): Free Stock Analysis Report
NETAPP INC (NTAP): Free Stock Analysis Report
TIVO INC (TIVO): Free Stock Analysis Report
INTUIT INC (INTU): Free Stock Analysis Report
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