Dun & Bradstreet Corp. (NYSE:DNB) is set to report second quarter 2014 results on Aug 6. Last quarter, it posted an 18.32% positive surprise. The company has posted an average positive earnings surprise of 5.93% over the past four quarters.
Let’s see how things are shaping up for this announcement.
Growth Factors This Past Quarter
We believe that DNB’s high-margin business model, strong international growth potential, international growth opportunities, strategic investments, partnerships, accretive cloud-based acquisitions and aggressive share buyback will drive growth.
We believe that partnerships with the likes of Salesforce.com (NYSE:CRM), and FirstRain will help the company to expand its data-as-a-service model, which in turn will boost top-line growth. We also expect the company to pursue strategic acquisitions that will boost its position in cloud-based offerings.
However, increasing competition from companies such as Equifax Inc. (EFX) will continue to hurt revenues and profitability in 2014. Moreover, higher debt level remains a concern.
Earnings Whispers?
Our proven model does not conclusively show that DNB is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Negative Zacks ESP: This is because the Most Accurate estimate stands at $1.34 while the Zacks Consensus Estimate is higher at $1.36. That is a difference of -1.47%.
Zacks Rank: DNB’s Zacks Rank #2 (Buy) when combined with a negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter: