The Beats
To determine possible positive surprises we look for companies that have the following characteristics: 1. Large positive deltas vs. Wall Street 2. Significant upward revisions momentum into the report 3. A long history of beating 4. A long history of Estimize accuracy vs. the Street
Cyberark Software (NASDAQ:CYBR)
Information Technology - Software | Reports August 7, after the close
The Estimize community is looking for earnings per share (EPS) of $0.29 when CyberArk reports on Tuesday, revised upward by 19% in the last 3 months and 19% higher than Wall Street’s $0.24. Revenues are also expected to come in higher at $75.5M as compared to the sell side’s consensus of $72.9M. Year-over-year (YoY) EPS and revenue growth are expected to come in healthy at 37% and 31%, respectively. This is a name that tends to beat the Estimize consensus 93% of the time on EPS and 93% on revenues, and that Estimize is more accurate than Wall Street on 93% of the time on EPS and 93% on Revenue.
This cybersecurity name continues to benefit from widespread data breaches, as corporations and governments increase spending on software to prevent future instances. In addition to improving EPS and revenue growth, the Estimize community also expects License Revenue to grow 23% YoY to $37.2M. Increased demand in the space has lead to CyberArk ramping up its acquisition strategy, most recently with the purchase of cloud security provider, Valuative, earlier this year. Also expected to increase the top-line is the CyberArk Marketplace, launched in Q2. According to the press release this is “the industry’s broadest and deepest portfolio of integrations with a privileged access security solution. The CyberArk Marketplace delivers unprecedented simplicity and speed for security and IT operations teams to extend the benefits of securing privileged access across the enterprise.”
New Relic (NYSE:NEWR)
Information Technology - Internet & Software Services | Reports August 7, after the close
The Estimize community is looking for earnings per share (EPS) of $0.14 when New Relic reports on Tuesday, revised upward by 169% in the last 3 months and 18% higher than Wall Street’s $0.12. Revenues are also expected to come in higher at $106.8M as compared to the sell side’s consensus of $106.1M. Year-over-year (YoY) EPS and revenue growth are expected to come in healthy at 251% and 33%, respectively. This is a name that tends to beat the Estimize consensus 91% of the time on EPS and 91% on revenues, and that Estimize is more accurate than Wall Street on 91% of the time on EPS and 100% on Revenue in the last 11 quarters.
We continue to believe that the enterprise tech sector is THE place for investors to focus given the massive cap-ex spending cycle within main street businesses that is taking place. These companies are showing large and upwardly revised revenue growth estimates and have massive leverage on that revenue given the limited need for headcount in a very tight labor market. New Relic is one beneficiary of this increased spending, with their bread and butter products including application performance monitoring (APM) tools which help companies garner insights on how specific segments of their business are performing through conversion metrics, website analytics and other metrics. Even NEWR’s non-APM business is expected to catch up to APM in the next 5 years.
Michael Kors Holdings (NYSE:KORS)
Consumer Discretionary - Textiles, Apparel & Luxury Goods | Reports August 8, before the open
The Estimize community is looking for earnings per share (EPS) of $1.00 when Michael Kors reports on Wednesday, revised upward by 11% in the last 3 months and 6% higher than Wall Street’s $0.94. Revenues are also expected to come in higher at $1.16B as compared to the sell side’s consensus of $1.14B. Year-over-year (YoY) EPS and revenue growth are expected to come in healthy at 25% and 22%, respectively. This is a name that tends to beat the Estimize consensus 84% of the time on EPS and 84% on revenues, and that Estimize is more accurate than Wall Street on 92% of the time on EPS and 92% on Revenue.
This is not a name you would have expected to see on this list in the last year or two, after KORS suffered some missteps and weakening demand as it tried to straddle the luxury and affordable accessories categories. In order to reinstate it’s cache it started offering fewer online promotions, closed down underperforming stores and began innovating on new product lines which includes men’s footwear. The company is investing heavily in their digital platforms in order to offer a more seamless customer experience at a time when online buying continues to expand. International growth is anticipated to grow as well, especially with acquisitions of brands such as Jimmy Choo.
The Misses
To determine possible positive surprises we look for companies that have the following characteristics: 1. Large positive deltas vs. Wall Street 2. Significant downward revisions momentum into the report 3. A long history of missing 4. A long history of Estimize accuracy vs. the Street
Hertz Global Holdings (NYSE:HTZ
Industrials - Road & Rail | Reports August 6, after the close
The Estimize community is looking for earnings per share (EPS) of -$0.33 when Hertz reports tomorrow after the bell, revised downward by 382% in the last 3 months and 30% lower than Wall Street’s -$0.25. Revenues are roughly in-line at $2.3B. Despite falling expectations, the company is still expected to see year-over-year (YoY) of 48% in EPS and 5% for revenues. However, this is a name that has only beaten the Estimize EPS consensus 18% of the time, and only 36% of the time for revenues, which doesn’t bode well for a positive surprise tomorrow.
With the dominance of Uber, Lyft and other ride sharing services, it’s been increasingly difficult for Hertz and other rental car businesses to compete. The stock is already down 30% this year, with Avis, the only other publicly traded rental car company, not far behind at -20% for the year. Rental cars haven’t traditionally been considered solid businesses as they carry high costs and there are several cheaper alternatives. The Ubers and Lyfts of the world aren’t the only worry for Hertz, but the progression of autonomous driving vehicles will likely make the entire industry obsolete.
ANGI Homeservices (NASDAQ:ANGI)
Information Technology - Internet & Software Services | Reports August 8, after the close
The Estimize community is looking for earnings per share (EPS) of $0.00 when ANGI Homeservices reports on Wednesday, revised downward by 89% in the last 3 months and a penny lower than Wall Street. Revenues expectations of $292.6M are also lower than the sell-side’s $293.6M, falling 4% in the last 3 months. Despite falling expectations, the company is still expected to see year-over-year (YoY) growth of 99% in EPS and 302% for revenues. However, this is a name that has only beaten the Estimize EPS consensus 50% of the time, and only 38% of the time for revenues, which doesn’t bode well for a positive surprise tomorrow, with Estimize being more accurate than Wall Street 67% of the time.
It’s expected to be another bad quarter for ANGI, which has reported negative EPS for the last 4 quarters. Prior to the September 2017 merger with IAC HomeAdvisor, Angie’s List had posted 5 quarters of negative YoY revenue growth, the merger then inflated top-line numbers making the year-over-year picture apples to oranges. Last quarter the company reported an operating loss of $10.8M, somewhat due to costs related to the Angie’s List deal. The addition of the free membership tier exactly 2 years ago seems to not have helped, either. Other crowdsourced reviews platforms for local businesses such as YELP are also expected to be in the red for Q2.