Equifax Inc. (EFX) is set to report second-quarter fiscal 2014 results on Jul 23. Last quarter, the company posted a positive surprise of 2.30%. Let us see how things are shaping up for this announcement.
Factors to Consider this Past Quarter
Equifax reported mixed first-quarter results. While the company’s bottom line beat the Zacks Consensus Estimate, the top line missed the same. Nonetheless, the company’s revenues increased on a year-over-year basis aided by strong growth across most of its business segments.
We believe strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America are encouraging. Nonetheless, tough mortgage and currency headwinds remain overhangs.
Moreover, incremental investments in products and services, and international expansions are expected to keep margins under pressure in the near term.
Earnings Whispers?
Our proven model does not conclusively show that Equifax is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
Zacks ESP: The Earnings ESP for Equifax is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 94 cents per share.
Zacks Rank: Equifax’s Zacks Rank #3 (Hold) 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 negative estimate revisions momentum.
Stocks to Consider
Here are a few of companies worth considering, which as per our model shows have the right combination of elements to post an earnings beat this quarter:
NVIDIA Corp. (NVDA), with an Earnings ESP of +31.58% and a Zacks Rank #1 (Strong Buy).
F5 Networks, Inc. (FFIV), with an Earnings ESP of +3.81% and a Zacks Rank #2 (Buy).
Western Digital Corp (WDC), with an Earnings ESP of +4.02% and a Zacks Rank #2.
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