Will Dun & Bradstreet (DNB) Q1 Earnings Pull Off A Surprise?

The Dun & Bradstreet Corporation (NYSE:DNB) is set to release first-quarter 2017 earnings on May 1. In the last quarter, the company reported a negative earnings surprise of 0.99%. However, the company delivered positive earnings surprises in the last four quarters, with an average of 10.73%.

Let's see how things are shaping up for this announcement.

Factors at Play

Dun & Bradstreet is expected to benefit from its high-margin business model and strong product portfolio. Its partnerships with big players have also helped it bring many more customers into the fold. Plus, the company is also well-positioned to gain from its strategic acquisitions and alliances. Dun & Bradstreet’s focus on expanding analytics capabilities is another positive.

However, though the company’s Americas business remains strong, the international business continues to be a drag on financials. Stiff competition, weak DNBi business and high debt are other areas of concerns. Plus, increasing competition from companies such as FactSet Research Systems Inc. (NYSE:FDS) and Nielsen N.V. (NYSE:NLSN) and a high debt level remain major concerns.

We believe that this uncertainty has dented share price movement in recent times. On a year-to-date basis Dun & Bradstreet shares have declined 9.8% against the Zacks Business - Information Services Industry’s gain of 12.3%.

While the company is expected to gain from an improved sales strategy, reinvigorated by a better business mix and a motivated sales force, we believe that uncertain macroeconomic environment will keep the top line under pressure.

Earnings Whispers

Our proven model does not conclusively show that Dun & Bradstreet is likely to beat earnings estimates 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. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Dun & Bradstreet is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at earnings of 89 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dun & Bradstreet’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

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

Stock That Warrants a Look

Here is a company that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release:

DragonWave (TO:DRWI) with an Earnings ESP of +8.82% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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