What To Expect From FireEye (FEYE) This Earnings Season?

FireEye Inc. (NASDAQ:FEYE) is set to report first-quarter 2017 results on May 2. Last quarter, the company posted a narrower-than-expected loss. Let’s see how things are shaping up for this announcement.

Factors at Play

FireEye, headquartered in Milpitas, CA, is a global provider of web, email, file and malware security to both enterprises, and governments. Of late, the company’s top-line growth has been affected due to its transition to the cloud and a shift in the business model from hardware centric to subscription-based services.

It should be noted that the company generates higher initial sales from hardware than subscriptions. Although a shift from product-based to subscription-based business model will lead to more stable revenues over the long run, we believe the transition will adversely affect FireEye’s results in the first quarter.

Furthermore, intense competition from other major and established players like Check Point Software Technologies Ltd. (NASDAQ:CHKP) and Palo Alto Networks Inc. may hurt its first-quarter results.

Nonetheless, FireEye’s ongoing cost-optimization initiatives, which include the closure of some facilities, headcount reductions and minimization of discretionary spending, will likely aid its bottom line in the first quarter.

FireEye, Inc. Price and EPS Surprise

FireEye, Inc. Price and EPS Surprise | FireEye, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Pitney Bowes (NYSE:PBI) will beat earnings estimates in 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 at least 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for FireEye is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: FireEye 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 and 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Avid Technology Inc. (NASDAQ:AVID) , with an Earnings ESP of +160% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Blackbaud Inc. (NASDAQ:BLKB) , with an Earnings ESP of +5.88%, and a Zacks Rank #3.

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