Storage solutions provider Seagate Technology plc (STX) is set to report third-quarter 2014 results on Apr 29.
Last quarter, the company delivered 5.71% negative earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
Seagate reported a dismal second quarter wherein the top and bottom lines not only declined year over year, but also missed the Zacks Consensus Estimate.
The increase in investments to provide new and innovative products, sluggish macroeconomic conditions and a flattish price environment prompted the company to provide a modest guidance.
We remain encouraged by the secular growth of digital data, modest growth in the total addressable market and higher demand for Seagate’s storage, which are expected to drive near-term results. Additionally, synergies from acquisitions and product innovations continue to drive growth.
Moreover, Seagate is coming up with customized products to cater to new customers and expand market share. The company’s significant exposure to high-end corporate desktop and enterprise server markets also remains a positive. Nonetheless, competition from Western Digital Corp. (WDC), SanDisk Corp. (SNDK) and Fusion-io are the concerns, going forward.
Earnings Whispers?
Our proven model does not conclusively show that Seagate 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 we see below.
Zacks ESP: The Most Accurate estimate stands at $1.26, in line with the Zacks Consensus Estimate. Hence, the difference is 0.00%.
Zacks Rank: Seagate has a Zacks Rank #2 (Buy) which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Other Stocks to Consider
ON Semiconductor Corp. (ONNN) has an Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment