Juniper (JNPR) To Report Q1 Earnings: What's In Store?

Juniper Networks Inc. (NYSE:JNPR) is set to release first-quarter 2017 earnings on Apr 25. Notably, the company has a mixed record of earnings surprises in the trailing four quarters, with an average surprise of 1.56%.

In the last quarter, Juniper reported adjusted earnings (including share-based compensation and share-based payroll tax expense) of 52 cents per share, which was in line with the Zacks Consensus Estimate and remained flat on a year-over-year basis.

Moreover, the company’s revenues of $1.39 billion surpassed the Zacks Consensus Estimate and its own expectation of $1.35 billion (+/- $30 million). Revenues increased almost 5% on a year-over-year basis.

Juniper anticipates revenues of approximately $1.20 billion (+/- $30 million) for first-quarter 2017, which reflects sequential decline. However, on a year-over-year basis, revenues are expected to improve more than 9%.

Non-GAAP gross margin is projected to be around 62.5% (+/- 0.5%). The company expects non-GAAP operating expenses of $515 million (+/- $5 million), and non-GAAP operating margin of almost 19.5%. Non-GAAP earnings are expected to range within 38–44 cents per share.

Despite the moderate results and unimpressive guidance Juniper’s shares have outperformed the Zacks Wireless Equipment industry on year-to-date basis. While the industry lost 7.6%, the stock declined 1.6%.

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

Factors to Consider

Juniper’s frequent product launches, cost reduction initiatives and improving execution are encouraging. Additionally, the company’s expansion into the software defined network (SDN) segment is likely to strengthen its position in the networking space, which is positive in our view.

Vodafone’s selection of Juniper’s Contrail Networking SDN solution reflects the company’s growing clout in the segment. Further, the company’s products were selected by the likes of Tokyo Stock Exchange, A2B Internet and Sony (NYSE:SNE) during the quarter, which is evident of the strong demand for its products.

Last month, Juniper announced organizational changes by creating a new position of Strategy and Product Line Management, senior vice president, and appointed Kevin Hutchins to the role. The organizational realignment reflects the company’s focus on accelerating innovation and new product development.

However, pricing pressure and product mix fluctuations are significant headwinds that will hinder growth. Moreover, the seasonally weak first-quarter will weigh on results in our view.

Earnings Whispers?

Our proven model does not conclusively show that Juniper 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: Juniper’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 31 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Juniper carries a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

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

Teradyne (NYSE:TER) with an Earnings ESP of +2.63% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Motorola Solutions (NYSE:MSI) with an Earnings ESP of +10.00% and a Zacks Rank #2.

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