Juniper Networks (JNPR) is set to report second-quarter fiscal 2014 results on Jul 22. Last quarter, the company posted in-line earnings. Moreover, it is also worth noting that Juniper has outperformed the Zacks Consensus Estimate in two out of the four preceding quarters with an average positive surprise of 19.4%.
Let us see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Juniper posted mixed first-quarter results wherein the top line exceeded the Zack Consensus Estimate but the bottom line lagged the same.
Recently, Juniper entered into a strategic partnership with wireless-network equipment maker Aruba Networks, Inc. to provide integrated wired and wireless network solutions. We believe that Juniper Networks will gain significantly from this collaboration as it will help the company to expand its WLAN business and meet the escalating needs of customers and thereby strengthen its market position.
Additionally, the company’s expansion into the software defined networking segment is expected to strengthen its position in the networking space. Moreover, increased spending by service providers such as AT&T and Verizon should also support the company’s near-term fundamentals.
We also remain encouraged by the company’s product launches, cost reduction initiatives and improved execution. However, charges related to the company’s restructuring initiatives are expected to impact near-term profitability. Competition from Cisco and F5 Networks also remains a concern.
Earnings Whispers?
Our proven model does not conclusively show that Juniper will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 28 cents. Hence, the difference is 0.00%.
Zacks Rank: Juniper’s Zacks Rank #3 (Hold), 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 are some other companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
NVIDIA Corporation (NVDA) has an Earnings ESP of +31.58% and holds a Zacks Rank #1 (Strong Buy).
F5 Networks, Inc. (FFIV) has an Earnings ESP of +3.81% and a Zacks Rank #2 (Buy)
Garmin Ltd. (GRMN) has an Earnings ESP of +1.33% and a Zacks Rank #3
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