What’s in Store for Glu Mobile (GLUU) this Earnings Season?
Glu Mobile, Inc. GLUU, a developer of gaming applications for smartphone and tablets, is set to release second-quarter 2015 results on Aug 4. The company reported a positive earnings surprise of 100% in the last reported quarter.
The company has delivered positive earnings surprises in the trailing four quarters with an average beat of 161.61%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Last quarter, Glu Mobile witnessed strong growth in both top and bottom lines driven by its strong portfolio, including Kim Kardashian: Hollywood and new product launches like Dino Hunter: Deadly Shores, Tap Sports: Baseball, Deer Hunter 2014, Eternity Warriors 3, Contract Killer: Sniper and Racing Rivals. The company also signed a five-year mobile gaming partnership with popular singer and songwriter Katy Perry for developing a free-to-play mobile game that is expected to be launched in the latter half of this year.
This month, the company launched its latest game, Tap Sports Baseball 2015, which is likely to drive growth going forward. Also, the company remains well positioned to benefit from the strength in the global mobile game market.
However, growing competition from established players will make it difficult for the company to register strong growth in the near term. Further, significant investment in research and development of new games will likely be a headwind for the company, putting pressure on margins.
Earnings Whispers?
Our proven model does not conclusively show that Glu Mobile is likely to beat earnings this quarter. This 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: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 4 cents.
Zacks Rank: Glu Mobile carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction 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 negative estimate revisions momentum.
Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ducommun Inc. DCO, with an Earnings ESP of +69.23% and a Zacks Rank #1 (Strong Buy).
SunEdison Inc. SUNE, with an Earnings ESP of +8.89% and a Zacks Rank #3.
Amtech Systems Inc. ASYS, with an Earnings ESP of +8.00% and a Zacks Rank #3.
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