Dun & Bradstreet Corp. (DNB) is set to report first quarter 2014 results on Apr 29. Last quarter, it posted a 3.51% negative surprise. We note that DNB has outperformed the Zacks Consensus Estimate in the preceding four quarters with an average positive surprise of 1.92%.
Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
DNB reported mixed results in the fourth quarter of 2013. The company’s high-margin business model, strong international growth potential, emerging market growth opportunities, strategic investments, incremental cost savings and new product pipeline will drive growth going forward.
The company has recently entered into strategic partnerships with as the likes of Salesforce.com (CRM), SugarCRM, and FirstRain. These alliances are expected to help DNB to expand its data-as-a-service model, which in turn will drive its top line going forward.
However, we believe that a sluggish macroeconomic environment in its operating markets remains a major concern. Moreover, we believe that increasing competition from companies including Equifax Inc. (EFX) will hurt profitability, going forward.
Earnings Whispers?
Our proven model does not conclusively show that DNB is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Most Accurate estimate stands at $1.31 and coincides with the Zacks Consensus Estimate. Hence, the difference is of 0.00 %.
Zacks Rank #3 (Hold): DNB’s Zacks #3 Rank when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here is one company, which you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
On Semiconductor Corp. (ONNN), Earnings ESP of 6.67% and Zacks Rank #1 (Strong Buy)
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