Citrix Systems (CTXS) Q1 Earnings: Is A Surprise In Store?

Citrix Systems Inc. (NASDAQ:CTXS) is scheduled to report first-quarter 2017 results on Apr 26, after the market closes.

Last quarter, the company recorded a positive 13.49% earnings surprise. Moreover, the company beat estimates in each of the last four quarters with the average earnings surprise at 17%. Let’s see how things are shaping up for this announcement.

Earnings Whispers

Our quantitative model does not show conclusively that Citrix Systems is likely to beat on earnings in the first quarter. According to our proven model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise. However, this is not the case as highlighted below.

Zacks ESP: The Earnings ESP for Citrix Systems is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 75 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Citrix Systems holds a Zacks Rank #3. Though the company has a favorable Zacks Racks, its 0.00% ESP complicates our surprise prediction.

Conversely, 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.

Factors Likely at Play

We believe that Citrix Systems’expanded product portfolio will aid results in the first quarter. We are positive on the company’s growth by acquisition strategy. During the first quarter of 2017, Citrix acquired Unidesk which invented the popular application layering technology.

Citrix Systems expects (excluding GoTo business) the net revenues in the band of $655 million to $665 million for the first quarter of 2017. Earnings per share (on an adjusted basis) are projected in the range of $0.93 to $0.95. The merger between LogMeIn (NASDAQ:LOGM) and Citrix's GoTo business was completed in the first quarter of 2017.

However, Citrix's results in the first quarter are liable to be affected by foreign exchange movements as it continues to foray into non-U.S. markets. Earnings might also be affected by slow-paced economic growth in major economies as well as intense competition from peers.

Stocks to Consider

Here are some stocks in the broader computer and technology space, investors may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

Harris Corp. (NYSE:HRS) has an Earnings ESP of +3.85% and a Zacks Rank #3. The company will report third-quarter fiscal 2017 earnings results on May 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apple Inc. (NASDAQ:AAPL) has an Earnings ESP of +1.00% and a Zacks Rank #3. The company will report second quarter fiscal 2017 results on May 2.

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