CyberArk Software (CYBR) Q2 Earnings: What's In Store?

CyberArk Software, Ltd. (NASDAQ:CYBR) is set to report second-quarter 2016 results on Aug 9. Last quarter, the company posted a positive earnings surprise of 36.4%. Let’s see how things are shaping up for this announcement.

Factors to Consider

CyberArk is an Israeli company that specializes in protecting accounts from cyber-attacks. The company offers several products that protect passwords, close loopholes in the security system, and secure cloud-based assets.

The company reported better-than-expected first-quarter 2016 results. Also, revenues increased from the year-ago quarter, primarily due to high license growth.

According to research firm, Markets and Markets, the cyber security market is expected to touch $170.21 billion by 2020 from $106.32 billion in 2015, growing at an annual rate of 9.8%. We believe that CyberArk Software is in a favorable position to tap the opportunities.

Furthermore, investments in product suite and go-to-market are the other positives for the company.

It is worth mentioning that demand for cyber security is on the rise. With the advancement in technology, more organizations are adopting a bring-your-own-device policy, which has enhanced employee productivity with anytime, anywhere access. However, it has made it all the more necessary to enforce stricter data security measures.

Earnings Whispers

Our proven model does not conclusively show that CyberArk will beat earnings estimates 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: Its Earnings ESP is -20.00% as the Most Accurate estimate of 12 cents is pegged lower than the Zacks Consensus Estimate of 15 cents.

Zacks Rank: CyberArk’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

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 negative estimate revisions momentum.

Stocks to Consider

Here are a few companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Alamos Gold, Inc. (TO:AGI) , with an Earnings ESP of +100.0% and a Zacks Rank #2

Sun Life Financial Inc. (TO:SLF) , with an Earnings ESP of +1.47% and a Zacks Rank #2

Vivint Solar, Inc. (NYSE:VSLR) , with an Earnings ESP of +1.79% and a Zacks Rank #3