What to Expect from Dot Hill Systems’ (HILL) Q2 Earnings?

Dot Hill Systems Corp. HILL is scheduled to report second-quarter 2015 results on Aug 6. Last quarter, the company posted a positive earnings surprise of 25.00%.

Let us see how things are shaping up for this announcement.

Factors to Consider

Dot Hill Systems is a leading independent provider of carrier-class data storage solutions for Internet generation applications. The company has been witnessing increasing demand for data generation and data sharing solutions. We believe that the company will continue to benefit from the growing need for advanced storage solutions. Moreover, product launches and expected growth in the deal pipeline will boost the company’s revenues in the second quarter.

However, a volatile spending atmosphere and competition from EMC Corporation EMC and NetApp are likely to have a negative impact on the results in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Dot Hill Systems will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Dot Hill Systems has an Earnings ESP of -20.00% as the Most Accurate estimate of 4 cents is less than the Zacks Consensus Estimate of 5 cents.

Zacks Rank: Dot Hill Systems currently has a Zacks Rank #1 which 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 a Zacks Rank #4 or 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 couple of companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

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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