MINDBODY, Inc. MB is set to report second-quarter 2015 results on Aug 4. Let us see how things are shaping up for this announcement.
Factors to Consider
MINDBODY, Inc. develops cloud-based business management software and payments platform for the wellness services industry. The company currently services 42,000 businesses in over 124 countries worldwide.
MINDBODY launched its IPO (initial public offering) on Jun 18, offering 7.15 million shares for a price of $14 per share. The net proceeds for the deal were expected to be $89.3 million. The company now trades under the ticker MB.
MINDBODY has seen revenue growth of $31.99 million in 2012, $48.69 million in 2013, and $70.01 million in 2014. Growth in the first quarter of this current year was 42.2% compared with the year-ago level.
While the market for management software solutions for the wellness business is slated to grow 17% between 2015 and 2018, it is unclear if MINDBODY will be able to take advantage. Aside from profitability issues, the company is also facing declining cash reserves, but is hoping that the proceeds from the IPO will replenish its cash supply and allow the firm to focus on growth initiatives.
Moreover, if the company can fix its profitability issues and tap into the substantial growth opportunity in the industry over the next few years, it will definitely be one to watch out for.
Earnings Whispers
Our proven model does not conclusively show that MINDBODY is likely to beat the Zacks Consensus Estimate in the upcoming release. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for MINDBODY is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 31 cents per share.
Zacks Rank: MINDBODY has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% 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 negative estimate revisions momentum.
Stocks to Consider
Here are some other companies, which are worth considering, as our model shows that they have the right combination of these two elements:
Walker & Dunlop, Inc. WD, with an Earnings ESP of +5.77% and a Zacks Rank #1 (Strong Buy)
CubeSmart CUBE, with an Earnings ESP of +6.90% and a Zacks Rank #2 (Buy)
Agrium Inc. AGU, with an Earnings ESP of +0.62% and a Zacks Rank #3
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