MINDBODY, Inc. (NASDAQ:MB) is set to report second-quarter 2016 results on Jul 27. Last quarter the company reported a positive earnings surprise of 32%. Let us see how things are shaping up for this announcement.
Factors to Consider
MINDBODY develops cloud-based business management software and payments platform for the wellness services industry. The company currently provides its services to 42,000 businesses in over 124 countries worldwide. With such a huge client base, the company is expected to post impressive earnings numbers in the second quarter.
Though the company posted a loss in the first quarter of 2016, the reported figure was narrower than the Zacks Consensus Estimate.
MINDBODY’s gross margin for the first quarter was 68.8%, up from 60.9% reported in the year-ago quarter. The year-over-year growth in gross margin was primarily due to a higher revenue base.
Furthermore, significant investments in growth areas for improving implementation timelines, particularly for web and mobile applications products, will likely boost profitability in the to-be reported quarter.
Earnings Whispers
Our proven model does not conclusively show that MINDBODY is likely to beat the Zacks Consensus Estimate in the upcoming release. 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. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for MINDBODY is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 19 cents per share.
Zacks Rank: MINDBODY has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks with (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies, which are worth considering, as our model shows that they have the right combination to post an earnings beat this quarter:
McKesson Corporation (NYSE:MCK) with an Earnings ESP of +1.20% and a Zacks Rank #2
Garmin Ltd. (NASDAQ:GRMN) with an Earnings ESP of +4.48% and a Zacks Rank #3
Amazon.com, Inc. (NASDAQ:AMZN) with an Earnings ESP of +37.72% and a Zacks Rank #3
AMAZON.COM INC (AMZN): Free Stock Analysis Report
GARMIN LTD (GRMN): Free Stock Analysis Report
MCKESSON CORP (MCK): Free Stock Analysis Report
MINDBODY INC-A (MB): Free Stock Analysis Report
Original post