F5 Networks (FFIV) To Post Q2 Earnings: A Beat In Store?

F5 Networks Inc. (NASDAQ:FFIV) is set to report second-quarter fiscal 2018 results on Apr 25. Last quarter, the company posted a positive earnings surprise of 10.8%. Notably, F5 Networks has a mixed earnings surprise history. In the trailing four quarters, the company’s results surpassed the Zacks Consensus Estimate twice, came in line in another and missed in the other. It has an average positive earnings surprise of 5.2%.

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

What the Zacks Model Unveils?

Our proven model shows that F5 Networks is likely to beat on earnings this quarter as it possesses the two key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

F5 Networks carries a Zacks Rank of 3 and has an Earnings ESP of +0.27%.

The Zacks Consensus Estimate for the fiscal second-quarter earnings is pegged at $2.26, which indicates a 15.9% year-over-year increase. We note that the Zacks Consensus Estimate has remained unchanged over the past 30 days. Additionally, analysts polled by Zacks project revenues of roughly $529 million, up 2.1% from the year-ago quarter.

F5 Networks, Inc. Price and EPS Surprise

What’s Behind This Overwhelming Expectation?

F5 Networks is uniquely positioned to benefit from the growth prospects of the application-networking market as enterprises cope with the rapidly increasing capacity and security demands of next-generation applications and architectures. The company enjoys a strong foothold in the Layer 4-7 content switching market.

Furthermore, during the fiscal first-quarter conference call, F5 Networks’ management was optimistic about the deployment of solutions by customers on cloud and on-premise environment, which is expected to drive near-term revenues.

Additionally, the company is also taking steps to address the rising need of multi-cloud environment and better scaling of applications in an era where organizations are taking up digital transformation at an accelerated pace. To meet the requirement of the “per application based cloud decision” of companies, F5 Networks came up with per application VE solutions in the fiscal first quarter. These offerings are meant to support web-application firewall and management of traffic. The benefits from these moves will likely positively impact F5 Networks’ fiscal second-quarter results.

We believe the company’s recently-launched iSeries platform, which is useful for new age applications such as Internet of Things, will have attracted new customers, thereby boosting its top-line performance in the to-be-reported quarter.

Stocks With Favorable Combinations

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Western Digital Corporation (NASDAQ:WDC) has an Earnings ESP of +2.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Xilinx, Inc. (NASDAQ:XLNX) has an Earnings ESP of +5.26% and a Zacks Rank #2.

Advanced Micro Devices, Inc. (NASDAQ:AMD) has an Earnings ESP of +1.19% and a Zacks Rank #3.

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