Network traffic management software provider Gigamon Inc. (GIMO) is set to report third-quarter fiscal 2014 results on Oct 23. Last quarter, the company posted a negative earnings surprise of 29.41%. Let us see how things are shaping up for this announcement.
Factors to Consider This Past Quarter
Gigamon reported tepid second-quarter results wherein the bottom line missed the Zacks Consensus Estimate while the top line matched the same. Nonetheless, year-over-year comparisons were favorable due to growth across service providers and government sector.
Gigamon’s new and innovative product launches remain the growth catalysts. Its GigaSMART and GigaVUE-HC2 platforms are witnessing higher adoption. Moreover, the company is adding new clients, which is a positive. However, competition from the likes of Juniper (JNPR) and Cisco remain the concerns.
Earnings Whispers?
Our proven model does not conclusively show that Gigamon is likely to beat the Zacks Consensus Estimate in the third 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: ESP for Gigamon is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 15 cents.
Zacks Rank: Gigamon’s Zacks Rank #3 (Hold) when combined with an ESP of 0.00% 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 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:
Apple Inc. (AAPL) has an Earnings ESP of +4.62% and a Zacks Rank #2 (Buy).
Facebook Inc. (FB) has an Earnings ESP of +6.25% and a Zacks Rank #2.
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