Dun & Bradstreet Corp. DNB is set to report first-quarter 2015 results on May 4. Last quarter, it posted a 1.14% negative earnings surprise. The company has posted an average positive earnings surprise of 8.21% over the past four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
We believe that DNB’s high-margin business model, strong international growth potential, strategic investments, partnerships, accretive cloud-based acquisitions and aggressive share buyback will drive earnings in the first quarter.
In Jan 2015, the company acquired NetProspex, a leading B2B professional contact data and data management services provider. This acquisition is also likely to drive growth, going forward.
However, increasing competition from companies such as Equifax Inc. EFX and Nielsen N.V. NLSN will continue to hurt revenues and profitability in the near term. Moreover, higher debt level remains a concern in the to-be-reported quarter.
Management had stated that strategic alliances should drive revenue growth margins over the long term.
Earnings Whispers
Our proven model does not conclusively show that DNB 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: DNB has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.25 per share.
Zacks Rank: DNB’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stock to Consider
Here is another stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:
Cogent Communications Holdings, Inc. CCOI, with an Earnings ESP of +33.33% and a Zacks Rank #3.
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