Tech Data (TECD) Q1 Earnings: Will It Disappoint This Time?

Tech Data Corp. (NASDAQ:TECD) is set to release first-quarter fiscal 2017 results on May 26. Last quarter, the company posted a positive earnings surprise of 9.05%. It delivered positive surprises in three of the trailing four quarters, with an average beat of 16.06%.

Let us see how things are shaping up for this announcement.

Factors at Play

Tech Data has been undertaking strategic initiatives to review and strengthen its operations especially focusing more on high-growth areas. However, its exit from businesses in less profitable regions, though a positive in the long run, will weigh on near-term results. Also, Tech Data’s business has been affected by sluggish demand owing to a sluggish PC market. The company may face headwinds because of significant dependence on a handful of customers Apple (NASDAQ:AAPL) , Hewlett Packard Enterprise (NYSE:HPE) and HP.

Nonetheless, there can be some respite for the company as it benefits from the increasing demand for data center systems, cloud and mobility offerings. The company’s efforts to diversify into new domains also bode well.

For the first quarter of fiscal 2017, management expects revenues in a range of $5.85 billion to $6.05 billion (on a constant currency basis). Tech Data projects non-GAAP earnings per share in the range of 90 cents to 98 cents.

Earnings Whispers

Our proven model does not conclusively show that Tech Data is likely to beat earnings in the to-be-reported 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 Tech Data is -2.13%. This is because the Most Accurate estimate of 92 cents is below the Zacks Consensus Estimate of 94 cents.

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

Stock to Consider

Here is a stock you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:

TiVo Inc. (NASDAQ:TIVO) , with an Earnings ESP of +25.00% and a Zacks Rank #1.