Is A Beat In Store For Teradata (TDC) This Earnings Season?

We expect Teradata Corp. (NYSE:TDC) to beat expectations when it reports third-quarter 2017 results on Nov 2.

What Our Model Says

Our proven model shows that Teradata is likely to beat earnings estimates this quarteras it has the right combination of the two key ingredients. 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.

Zacks ESP: Teradata has an Earnings ESP of +4.76%. This is because the Most Accurate estimate stands at 22 cents while the Zacks Consensus Estimate is pegged at 21 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Teradata carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play

Teradata is well positioned in the Enterprise Data Warehousing (EDW) solutions market, including enterprise analytic technologies and services worldwide. Further, the company offers a robust product portfolio. Strategic acquisitions have been a key growth catalyst for Teradata over the past few years.

We also expect growth to come from new strategic partnerships as Teradata has long-standing business relationships with large organizations such as Accenture, Capgemini, Deloitte, Cognizant, IBM (NYSE:IBM), Wipro Limited, among others in the same niche market. We believe that new customer wins and strengthening relationships with large vendors will primarily drive revenues and profits.

We expect the company’s ongoing transition – especially with regard to new subscription pricing programs – to drive growth in the long run. However, revenues in the near term (including the quarter to be reported) may take a hit.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Cypress Semiconductor Corp. (NASDAQ:CY) with an Earnings ESP of +2.34% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank Stocks here.

Kemet Corp. (NYSE:KEM) with an Earnings ESP of +7.46% and a Zacks Rank #1.

NVIDIA Corp. (NASDAQ:NVDA) with an Earnings ESP of +0.53% and a Zacks Rank #1.

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