Global IT security software solution provider, CyberArk Software Ltd. (CYBR), is set to report fourth-quarter 2014 results on Feb 12. Last quarter, the company posted a positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to Consider
We remain encouraged by CyberArk’s sustained focus on offering industry-leading solutions and go-to-market business model which have helped it to drive growth. Furthermore, we expect that the increasing spending on IT security to positively benefit CyberArk’s fourth-quarter results. Per research firm Gartner, worldwide spending on IT security in 2014 was about $70 billion.
However, continuous investment in research and development could have a negative impact on the company’s bottom line. Moreover, competition from other players in the industry remains concerns.
Earnings Whispers
Our proven model does not conclusively show that CyberArk is likely to 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 earnings per share of a penny. Hence, the difference is 0.00%.
Zacks Rank: CyberArk’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a 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 companies worth considering which, as per our model, have the right combination of elements to post an earnings beat this quarter:
NVIDIA Corporation (NVDA), with an Earnings ESP of +3.45% and a Zacks Rank #2 (Buy).
Demandware, Inc. (DWRE), with an Earnings ESP of +25.00% and a Zacks Rank #3.
Criteo SA (CRTO), with an Earnings ESP of +4.00% and a Zacks Rank #3.
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