Will NetApp, Inc. (NTAP) Beat Earnings Estimates in Q1? - Analyst Blog

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We expect NetApp, Inc. ( NTAP ) 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: Earnings 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 earnings announcement.  

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. ( MYGN ), with Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).

Perry Ellis International Inc. ( PERY ), with Earnings ESP of +7.69% and a Zacks Rank #1.

Pinnacle Foods Inc. ( PF ), with Earnings ESP of +3.03% and a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: NTAP , MYGN , PERY , PF

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