Ingram Micro Inc. IM is set to report first-quarter 2015 results on May 4. In the last quarter, the company had posted in-line earnings. Let's see how things are shaping up for this announcement.
Factors to Consider
Ingram Micro reported modest fourth-quarter results, with the bottom line matching the Zacks Consensus Estimate but the top line beating the same. The company saw year-over-year improvement on both the counts, primarily attributed to robust demand across all regions coupled with better-than-expected growth in mobility business, supply chain solutions and cloud.
Recently, Ingram Microclosed the acquisition of Anovo, a Paris-based provider of after-sales support for phones and electronic devices. The acquisition will help Ingram Micro expand its global portfolio of service offerings and strengthen supply chain capabilities in the European and Latin American markets.
We believe that an improving IT spending trend will help Ingram post better results, going forward. Moreover, the company’s focus on the high-margin market and strategic acquisitions to increase market share are encouraging.
Ingram Micro has been striking distribution deals with a number of original equipment manufacturers, thereby expanding its product portfolio. Moreover, Ingram Micro’s exposure in cloud computing products is expected to drive growth.
Going forward, we remain fairly optimistic about its strategic relationship with network giants such as Juniper Networks Inc. JNPR and IBM IBM. The company’s growing small and medium-sized business (SMB) exposure and improving profitability are encouraging. However, its significant European exposure and debt burden remain concerns.
Earnings Whispers?
Our proven model does not conclusively show that Ingram Micro 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: ESP for Ingram Microis -2.27%. This is because the Most Accurate estimate stands at 43 cents, lower than the Zacks Consensus Estimate of 44 cents.
Zacks Rank: Ingram Micro’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
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 some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
- Walker & Dunlop, Inc. WD with an Earnings ESP of +20.00% and a Zacks Rank #1 (Strong Buy)
- Air Methods Corp. AIRM with an Earnings ESP of +5.88% and a Zacks Rank #2 (Buy)
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