Equinix Inc. (EQIX) is set to report first-quarter 2014 results on Apr 30. Last quarter, the company posted a positive earnings surprise of 42.3%. Let us see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Equinix delivered modest fourth-quarter 2013 results with earnings beating the Zacks Consensus Estimate and revenues remaining relatively in line. Growth across geographies and business segments helped revenues to improve on a year-over-year basis.
It is worth noting that demand for Equinix’s data centers are growing. The recurring revenue model is adequately supporting the company’s revenues. Moreover, the company’s proposed REIT conversion is on track. Additionally, the company’s associations with Verizon (VZ) and AT&T (T) remain growth catalysts, going forward.
On the other hand, European exposure and industry consolidation remains the headwinds. Moreover, the company’s highly leveraged balance sheet remains an overhang.
Earnings Whispers?
Our proven model does not conclusively show that Equinix will beat earnings this quarter. That 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 73 cents. Hence, the difference is 0.00%.
Zacks Rank: Equinix’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here is another company you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
ON Semiconductor Corp. (ONNN) has an Earnings ESP of +6.67% and holds a Zacks Rank #1 (Strong Buy).
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