What's In The Cards For Five9 (FIVN) This Earnings Season?

Five9 Inc. (NASDAQ:FIVN) is set to report third-quarter 2016 results on Nov 1. Last quarter, the company posted a loss of 7 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 11 cents. Moreover, the company has outperformed the Zacks Consensus Estimate in all of the four trailing quarters with an average positive surprise of 29.13%.

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

Factors to Consider

Five9 offers a virtual contact center cloud platform that acts as a hub for interaction between clients and customers. This facilitates contact center operations focused on inbound or outbound customer interactions within a single unified architecture. The company offers software products such as workforce management, speech recognition, predictive dialer and voice applications.

The cloud-based contact center solution industry has been witnessing growth over the past several quarters as organizations are looking for ways to minimize costs and improve customer support. We believe that Five9 has been capitalizing on this opportunity, which should be reflected in its to-be-reported quarter.

Furthermore, the company’s sustained focus on expanding its product portfolio will aid its top-line performance.

However, intensifying competition from small and large players like Cisco Systems (NASDAQ:CSCO) is likely to dent Five9’s third-quarter performance.

Earnings Whispers

Our proven model does not conclusively show that Five9 is likely to beat the Zacks Consensus Estimate in the upcoming release. 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Five9 is -10.00%. This is because the Most Accurate estimate stands at a loss of 11 cents while the Zacks Consensus Estimate is pegged at a loss of 10 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Though Five9’s Zacks Rank #1 increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against stocks with 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 companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corp. (NYSE:BYD) , with an Earnings ESP of +16.67% and a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corp. (NASDAQ:NVDA) , with an Earnings ESP of +8.93% and a Zacks Rank #3.

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