HubSpot, Inc. (NYSE:HUBS) is set to report second-quarter 2016 results on Aug 3, 2016. Last quarter, the company posted a positive earnings surprise of 17.1%. Let’s see how things are shaping up for this announcement.
Factors to Consider
HubSpot is a provider of inbound marketing software platform that helps companies attract visitors to their websites, convert visitors into leads, and close leads into customers. We are encouraged by the company’s sustained focus on investing in new product developments and international expansion, which will continue to drive its top line.
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 during the quarter. Revenues increased on a year-over-year basis.
Furthermore, a continuous rise in the rate measuring HubSpot’s revenue per user makes us optimistic about its top-line performance in the to-be-reported quarter. However, we remain cautious about HubSpot’s earnings owing to higher customer acquisition costs.
Earnings Whispers?
Our proven model does not conclusively show that HubSpot 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 HubSpot is 0.00% as both of the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss per share of 38 cents.
Zacks Rank: HubSpot 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.
PAYCOM SOFTWARE (PAYC): Free Stock Analysis Report
HUBSPOT INC (HUBS): Free Stock Analysis Report
QUALYS INC (QLYS): Free Stock Analysis Report
CDK GLOBAL INC (CDK): Free Stock Analysis Report
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