What's In The Cards For Workiva (WK) This Earnings Season?

Workiva Inc. (NYSE:WK) is set to report second-quarter 2016 results on Aug 3, 2016. Last quarter, the company posted a positive earnings surprise of 16.7%. Let’s see how things are shaping up for this announcement.

Factors to Consider

Workiva offers a cloud-based mobile-enabled platform for enterprises to collect, manage, report and analyze critical business data in real time. The exponential increase in the amount of data, complexity of data formats and the need to scale resources at regular intervals have compelled several companies to turn to cloud computing vendors.

Although the company reported a loss in first-quarter 2016, it compared favorably with the Zacks Consensus Estimate. Also, the top line surpassed the consensus mark in the quarter and increased on a year-over-year basis.

Cloud computing includes the entire gamut of computing intelligence required to carry out day-to-day operations by companies and professionals. Thus, other than the hardware, all the supporting technology involved in creating, storing, retrieving, transporting, protecting, sorting, processing, analyzing and presenting information from multiple sources and formats, which when available from a shared (private) or public pool, could be referred to as cloud computing.

Cloud service providers, therefore, help organizations to store data and applications remotely in this pool, which can be accessed from anywhere, anytime via the Internet. Given its scope and advantages (cost, scaling, convenience, etc.), demand for cloud computing software and applications will continue to increase. This will aid Workiva’s results in the second quarter and beyond.

We believe that increasing mainstream adoption of cloud-based solutions will boost Workiva’s second-quarter results.

However, an uncertain economic environment, currency headwinds and competition remain major concerns.

WORKIVA INC Price and EPS Surprise

WORKIVA INC Price and EPS Surprise | WORKIVA INC Quote

Earnings Whispers?

Our proven model does not conclusively show that Workiva is likely to 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. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Workiva is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss per share of 43 cents.

Zacks Rank: Workiva has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

CDK Global, Inc. (NASDAQ:CDK) with an Earnings ESP of +4.26% and a Zacks Rank #1

Paycom Software, Inc. (NYSE:PAYC) with an Earnings ESP of +7.69% and a Zacks Rank #3

Qualys, Inc. (NASDAQ:QLYS) with Earnings ESP of +12.50% and a Zacks Rank #3