Technology Stock Earnings On Oct 25: AAPL, AKAM, LOGI, NCR

Earnings releases are gaining momentum with results from 116 S&P 500 members or 23.2% of the index’s total market capitalization already out (as of Oct 21).

As per the latest Zacks Earnings Preview report, total earnings of these 116 index members are up 3.3% year over year on the back of 1.8% higher revenues. Beat ratios are impressive with 80.2% beating EPS estimates and 62.9% coming in ahead of top-line expectations.

More than 800 companies are set to report results this week, including 171 S&P 500 members. Notably, after consecutive five quarters of decline, earnings are now anticipated to show positive growth.

Overall third-quarter earnings for S&P 500 companies are now expected to inch up 0.1% (as compared with earlier estimate of -1%) from the year-ago quarter on revenues that are estimated to increase 1.5%.

The growth is expected to be driven by impressive results from the Finance sector, which is anticipated to mitigate sluggish growth from the Energy, Autos and Transportation sectors.

Technology Earnings Growth – Apple is Key

However, growth from Technology- another large sector in the list - is expected to remain muted due to lower earnings anticipation from Apple (NASDAQ:AAPL) .

We now have third-quarter results from 33.3% of the sector’s total market capitalization in the S&P 500 index. So far, total earnings are up 5% year over year on 0.2% lower revenues, with 88.2% beating EPS estimates and 70.6% beating revenue expectations.

Earnings for the Technology sector are now anticipated to be up 1.1% based on 1% lower revenues. Apple’s earnings are expected to decline 19.8% on 9.1% lower revenues, which will deal a major blow to earnings. Excluding Apple, earnings are estimated to grow 6.4%.

Here is a sneak peek into four technology companies lined up to report earnings on Oct 25.

Despite all the concerns related to Apple’s lowered guidance, we believe the iPhone-maker is well poised to beat earnings this quarter due to the favorable combination of a Zacks Rank #2 (Buy) and an Earnings ESP of 1.21%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 (Hold) to beat earnings. Simultaneously, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

We also note that Apple’s results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 1.03%. (Read More: Apple Q4 Earnings Preview: Will it Beat Estimates?)

Akamai Technologies Inc. (NASDAQ:AKAM) is unlikely to beat third-quarter 2016 earnings estimates as it has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.

Nevertheless, we believe Akamai will continue to benefit from the rising demand for cloud infrastructure solutions, security, mobile products and online video. The company’s strong presence in the web applications domain is a key catalyst. (Read More: Akamai Technologies Q3 Earnings: What's in Store?)

We also note that Akamai results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 4.14%.

Computer peripherals company Logitech International S.A. (NASDAQ:LOGI) is also unlikely to beat second-quarter 2017 earnings estimates due to the unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.

Logitech has been gaining from its robust business model that focuses on maximizing profit in PC peripherals and expanding into new business categories. The company’s cloud-based video conferencing services have been enjoying good growth momentum.

However, Logitech’s Tablet business continues to suffer from slowing product demand, which is likely to hinder its growth. Additionally, economic challenges in Russia and Europe as well as currency fluctuations continue to impact earnings.

Notably, Logitech’s results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of an impressive 103.94%.

Similarly, we don’t expect NCR Corp (NYSE:NCR) to post an earnings beat in third-quarter 2016 due to the unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.0%.

However, we believe that NCR’s position in the self-service kiosk space is encouraging, given tremendous growth prospects. Additionally, continuing contract win is positive for the stock. Nonetheless, softness in the ATM business in mature markets and intensifying competition are major headwinds. (Read More: Will NCR Corp. Keep its Earnings Streak Alive in Q3?)