Adobe Systems Inc
) is set to report second quarter 2013 results on June 18. Last
quarter, it posted a 10.0% positive surprise. Let's see how
things are shaping up for this announcement.
Growth Factors This Past Quarter
Adobe's first-quarter earnings of 22 cents were in line with
the Zacks Consensus Estimate. Revenues were down both
sequentially as well as from the year-ago quarter but were above
management's guidance due to increased adoption of Adobe's
Creative Cloud. Margin expansion was limited due to the change in
sales mix, which favored lower-margin products.
Adobe provided a modest outlook for the second quarter, with
revenues forecast to increase 0.8% sequentially. Adobe expects
non-GAAP earnings per share in the range of 29-35 cents, above
the Zacks Consensus Estimate of 21 cents.
Our proven model does not conclusively show that Adobe will
beat earnings this quarter. That is because a stock needs to have
both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, #2 or #3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
The Most Accurate estimate stands at 19 cents while the Zacks
Consensus Estimate is higher at 21 cents. That is a difference of
Zacks Rank #4 (Sell):
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks that have both a positive earnings ESP and a
favorable Zacks Rank are:
ACCENTURE PLC (ACN): Free Stock Analysis
ADOBE SYSTEMS (ADBE): Free Stock Analysis
AKAMAI TECH (AKAM): Free Stock Analysis
YAHOO! INC (YHOO): Free Stock Analysis Report
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), Earnings ESP of +8.11% and Zacks Rank #1 (Strong Buy)
), Earnings ESP of +3.51% and Zacks Rank #2
), Earnings ESP of +3.85% and Zacks Rank #2 (Buy)