Qihoo 360 Technology Co. Ltd. (QIHU) is set to release the third-quarter earnings on Nov 24, 2014.
Last quarter, the company delivered a negative earnings surprise of 9.09%. The company has delivered positive surprises in only two of the last four quarters, with an average beat of negative 0.41%. Let’s see how things are shaping up for this announcement.
Factors to Consider
We believe Qihoo 360 continues to solidify its position as the indisputable leader in the Chinese Internet market with its PC security products covering nearly 95% of Chinese PC Internet users and the mobile security solutions covering approximately 70% of Chinese smartphone users.
Qihoo expects to invest in product development and technology innovation as well as to expand its coverage of PC and mobile Internet. Its consistent focus on Internet and product innovation has been the cornerstone of its success.
However, with competition becoming more intense with players like Activision Blizzard, Inc. (ATVI) in the near future, Qihoo might suffer if it fails to expand and innovate the product line to suit the changing preferences of the market.
Earnings Whispers?
Our proven model does not conclusively show that Qihoo 360 is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESPand 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: Qihoo 360 has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 48 cents per share.
Zacks Rank: Qihoo’s Zacks Rank #3 (Hold), when combined with a 0.00% ESP, makes surprise predictions 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 revisions momentum.
Stocks to Consider
Here are some companies which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Esterline Technologies Corp. (ESL), with an Earnings ESP of +5.35% and a Zacks Rank #2 (Buy).
Pall Corporation (PLL), with an Earnings ESP of +2.50% and a Zacks Rank #3.
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