AppFolio, Inc. APPF is set to report second-quarter 2015 results on Aug 6. Let’s see how things are shaping up for this announcement.
Factors to Consider
AppFolio offers online management software applications to small and medium-sized property management and legal companies.
AppFolio launched its IPO (initial public offering) on Jun 26, offering 6.2 million shares for a price of $12 per share. The net proceeds from the deal were expected to be in the range of $71.4 million and $82.6 million. The company now trades under the ticker APPF.
Notably the company plans to use the money to increase its financial flexibility and workforce. AppFolio also seeks to use the funds to expand its departments of research and development.
In terms of the company’s financials, its revenues for the first quarter of 2015 saw a 61% year- over-year increase to $15.85 million, up from $9.8 million in the first quarter of the previous year. Unfortunately, the company has had a history of losses. In the first quarter of 2015, it posted a loss of $3.6 million loss..
Despite AppFolio’s history of losses, the company has been able to significantly increase its revenue year over year. The software solutions market for small-to-medium sized businesses is projected to double to $125 billion between now and 2016. If the company can improve on its profitability, it can be a valuable tech stock in the next few years.
Earnings Whispers
Our proven model does not conclusively show that AppFolio 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: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 17 cents. Hence, the difference is 0.00%.
Zacks Rank: AppFolio’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.
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:
Walker & Dunlop, Inc. WD, with an Earnings ESP of +5.77% and a Zacks Rank #1 (Strong Buy)
Amtech Systems Inc. ASYS, with an Earnings ESP of +8.00% and a Zacks Rank #3
SunEdison, Inc. SUNE, with an Earnings ESP of +13.33% and a Zacks Rank #3
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