) to beat expectations when it reports first quarter fiscal 2015
results on Aug 13.
Why a Likely Positive Surprise?
Our proven model shows that NetApp is likely to beat estimates
because it has the right combination of two key ingredients.
Positive Zacks ESP:
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is at +2.50%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #3 (Hold):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The sell rated
stocks (#4 and #5) should never be considered going into an
The combination of NetApp's Zacks Rank #3 and +2.50% ESP makes us
very confident about an earnings beat on Aug 13.
What is Driving the Better Than Expected Earnings?
NetApp's rapid adoption of its storage operating system - Data
ONTAP - and flash solutions ONTAP system remain growth catalysts.
The company's workforce reduction initiatives could also pave the
way for operating cost rationalization that would support margins.
Share buybacks should also lend support to the company's earnings.
Additionally, NetApp is gaining momentum in flash based solutions
with the newly introduced FAS8000 and EF550 all-flash array, which
will help the company to gain traction in the storage market. The
recent product launches and product refreshes will drive revenues
and improve cost efficiency, thus enhancing margins.
It is also noteworthy that NetApphas outperformed the Zacks
Consensus Estimate in three out of the four preceding quarters with
an average positive surprise of 2.65%.
Other Stocks to Consider
NetApp is not the only firm looking up this earnings season. We
also see likely earnings beats coming from these 3 stocks:
Myriad Genetics Inc. (
), with Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).
Perry Ellis International Inc. (
), with Earnings ESP of +7.69% and a Zacks Rank #1.
Pinnacle Foods Inc. (
), with Earnings ESP of +3.03% and a Zacks Rank #2 (Buy).
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