Dun & Bradstreet Corp. DNB is set to report second-quarter 2015 results on Aug 5. Last quarter, it posted a 6.4% positive earnings surprise. The company has posted an average positive earnings surprise of 5.23% over the past four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
The company reported mixed-results last quarter with earnings beating estimates but revenues lagging the same.
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 to-be reported quarter.
Recently, DNB also collaborated with the likes of Adobe Marketing Cloud, 1010data and Oracle Data Cloud to enhance its offerings. The company also announced the divestment of its Australia/New Zealand business to Archer Capital in order to focus more on its core commercial strategy.
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 and margins over the long term.
Earnings Whispers
Our proven model does not conclusively show that DNB is likely to beat earnings this quarter. 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. 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 $1.29 per share.
Zacks Rank: DNB’s Zacks Rank #2 (Buy) 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.
Another Stock to Consider
Here is another stock, which you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
Ashford Hospitality Trust, Inc. AHT has an Earnings ESP of +8.70% and a Zacks Rank #1 (Strong Buy).
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