Monster Worldwide, Inc. (MWW) is set to report fourth-quarter 2014 results on Feb 10. Last quarter, the company delivered a positive earnings surprise of 66.67%. The company delivered positive earnings surprise in one out of the last four quarters. It has an average four-quarter negative earnings surprise of 34.52%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Monster’s re-branding process is expected to boost its overall growth over the long run. The company recently outlined a strategy to completely refurbish its platform and business model to enhance the experience of recruiters, employers and job seekers.
Monster continues to diversify its customer base. It traditionally targeted the enterprise market or those businesses that are among the top 1,500 organizations operating on a global basis. However, the company is now concentrating on small-to-medium sized businesses (SMBs) operating primarily in local and regional markets.
Although Monster is taking steps to improve traffic in North America and Europe, the sluggish macroeconomic environment remains an overhang. Europe is not expected to recover soon, while North America is still sluggish. The macroeconomic outlook remains uncertain, causing customers to become conservative and thereby restrict the hiring budget. Unemployment levels are still high in Europe with little improvement in the U.S. Additionally, the sluggish growth trend in Asian markets, including India and Korea, will remain a major headwind, going forward.
Further, competition has intensified over the last few years in the online employment market, which, in our view, has resulted in Monster losing some market share to companies such as Naukri (Info Edge) and Hewitt Associates, among others. The barriers to entry into the Internet businesses are relatively low. Many of the cutting-edge recruiters have reduced their use of job boards in favor of alternative social media sites, such as LinkedIn and Facebook (FB), which have affected profitability.
Earnings Whispers
Our proven model does not conclusively show that Monster 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: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 1 cent. Hence, the difference is of 0.00%.
Zacks Rank: Monster’s Zacks Rank #2 (Buy) 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 a negative estimate revisions momentum.
Here are a couple of other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Century Aluminum Co. (CENX), with an Earnings ESP of +7.69% and a Zacks Rank #2.
Boyd Gaming Corporation (BYD), with an Earnings ESP of +16.67% and a Zacks Rank #2.
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