Glu Mobile, Inc. (GLUU), developer of gaming applications for smartphione and tablets, is set to release the third-quarter 2014 earnings on Oct 29. The company reported a positive earning surprise of 71.43% in the last reported quarter.
Notably, in the previous all four quarters the company has surpassed the Zacks Consensus Estimate with an average positive earnings surprise of 222.86%. Let’s see how things are shaping up for this announcement.
Factors to Consider
We believe that Glu Mobile remains well positioned to benefit from the strong mobile game market, going forward. However, growing competition from the established players will make it difficult for the company to register strong growth in the near term.
Further, Glu Mobile’s hit game Kim Kardashian: Hollywood is losing popularity despite recent efforts to upgrade its content and availability on Facebook. We believe that this will have a negative impact on the company’s upcoming results.
Earnings Whispers?
Our proven model does not conclusively show that Glu Mobile is likely to 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: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 8 cents.
Zacks Rank: Glu Mobile carries a Zacks Rank #2 (Buy) which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Synaptics Inc. (SYNA), with an Earnings ESP of +54.76% and a Zacks Rank #1 (Strong Buy).
Invensense Inc. (INVN), with an Earnings ESP of +10.00% and a Zacks Rank #2 (Buy).
Western Digital Corp. (WDC), with an Earnings ESP of +0.98% and a Zacks Rank #3 (Hold).
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