What’s in Store for Tableau Software (DATA) in Q2 Earnings?

Tableau Software, Inc. DATA is set to release second-quarter 2016 results on Aug 2. Last quarter, the company delivered a negative earnings surprise of 35.56%. The company has delivered negative earnings surprises in each of the last four quarters, with an average miss of 190.12%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Tableau Software is placed well to benefit from rising demand for business analytics tools. The company has been seeing strength in its offerings like the hybrid data architecture platform. The company has been taking a number of initiatives to boost its sales productivity and align its marketing efforts to drive growth.

However, the company’s growth has been slowing down. It hasn’t made profits yet. Ballooning expenses weigh on financials despite its efforts to control costs and cut down on hiring. Moreover, recently, the company witnessed some insider selling activity, which makes us less confident about the company’s performance in the to-be reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Tableau Software 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Tableau Software has an Earnings ESP of -2.70%. This is because the Most Accurate estimate stands at a loss of 38 cents while the Zacks Consensus Estimate is pegged at a loss of 37 cents.

Zacks Rank: Tableau Software’s Zacks Rank #3 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 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Zoetis Inc ZTS has an earnings ESP of + 2.27% and a Zacks Rank #1.

LATAM Airlines Group S.A. LFL has an earnings ESP of +166.67% and a Zacks Rank #2.

Expeditors International of Washington EXPD has an earnings ESP of +3.45% and a Zacks Rank #3.

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