Zynga Inc. ZNGA is set to report third-quarter 2015 results on Nov 3. Last quarter, the company delivered positive earnings surprise of 33.3%. On an average, Zynga has delivered a positive earnings surprise of 15.48% over the last four quarters.
Let’s see how things are shaping up for the upcoming announcement.
Factors at Play
Zynga is well positioned to benefit from the strong mobile game market. According to research reports, 2015 industry revenues from mobile games are expected to grow 16% year over year to reach $3.04 billon. The company is also expected to benefit from its elaborate cost cutting plans. However, intensifying competition from Glu Mobile and Electronic Arts remains a headwind.
For the third quarter, the company expects revenues to be $175 million to $190 million. Bookings are expected to be in the range of $155 million to $170 million. Non-GAAP net loss per share is expected to be in the range of 1-2 cents.
Earnings Whispers
Our proven model does not conclusively show that Zynga is likely to beat estimates 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. This is not the case here as you will see below.
Zacks ESP: Zynga has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 4 cents.
Zacks Rank: Zynga has a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP, makes surprise prediction difficult.
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 some stocks you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Facebook, Inc. FB, with an Earnings ESP of +5.71% and a Zacks Rank #1 (Strong Buy).
Agilent Technologies Inc. A, with an Earnings ESP of +2.13% and a Zacks Rank #2 (Buy).
Nexstar Broadcasting Group, Inc. NXST, with an Earnings ESP of +14.29% and a Zacks Rank #2.
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