Colorado-based data storage system provider Dot Hill Systems Corp. HILL is scheduled to report fourth-quarter 2014 results on Mar 5. Last quarter, the company posted a negative earnings surprise of 66.67%. Let us see how things are shaping up for this announcement.
Factors to Consider
Dot Hill serves vertical markets such as media & entertainment, telecommunications, Big Data/data analytics, oil & gas, and digital image capture. The company believes that the telecommunications and media & entertainment markets continue to leverage from increasing data generated by smartphone users and film studios.
Considering the fourth-quarter update issued by the company this January, we remain optimistic about its upcoming results. In the update, Dot Hill raised the revenue and earnings forecasts primarily due to greater traction in vertical markets coupled with product launches and better capacity utilization.
It now expects earnings in the range of 11 to 13 cents per share, up from 7 to 12 cents announced in Nov 2014. The Zacks Consensus Estimate is pegged at 10 cents.
Also, the company’s traction in vertical markets and strong revenues from this market are likely to boost the to-be-reported quarter results. However, a volatile spending atmosphere and competition from EMC Corporation EMC and International Business Machines pose concern.
Earnings Whispers
Our proven model does not conclusively show that Dot Hill 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 10 cents. Hence, the difference is 0.00%.
Zacks Rank: Dot Hill has a Zacks Rank #2 (Buy). Though a Zacks Rank #2 increases the predictive power of ESP, the company's ESP of 0.00% 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.
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:
Global Partners LP GLP, with an Earnings ESP of +75.00% and a Zacks Rank #2.
H&R Block, Inc. HRB, with an Earnings ESP of +103.57% and a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment