Factors Likely to Influence Gigamon's (GIMO) Q3 Earnings

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Gigamon Inc. GIMO is scheduled to report third-quarter 2017 results on Oct 26, 2017, after the opening bell. In the last reported quarter, the company delivered a positive earnings surprise of 66.7%. The company surpassed earnings estimates in each of the trailing four quarters, the average beat being 33.9%.

Before we discuss the factors likely to influence the forthcoming results, let's take a look at how the company performed in the last quarter.

Last quarter, its earnings of 10 cents per share surpassed the Zacks Consensus Estimate of 6 cents. However, reported earnings decreased 66.7% year over year.  Revenues of $69 million missed the consensus mark of $72 million and declined 8% year over year.

The company blamed higher-than-expected demand for certain products (part of HC2 family) for the year-over-year decline in revenues.

Expect What?

The Zacks Consensus Estimate for the quarter is pegged at 23 cents, reflecting a year-over-year decline of 36.1%. The Zacks Consensus Estimate for sales of $85 million indicates around 1% growth from the prior-year quarter.

Let's see how things are shaping up prior to this announcement.

Factors to Influence Q3 Results

Gigamon is engaged in providing intelligent Traffic Visibility solutions for enterprises, data centers and service providers.

Recently, the company launched two new products namely, a high performance HC3 platform and inline SSL Encryption/Decryption offering. These product launches are anticipatedto drive growth in the to-be reported quarter. The GigaSMART, GigaVUE-HC1 and GigaVUE-HC2 platforms continue to witness increased adoption. Moreover, the company is adding clients, which should boost financial results.

We believe that Gigamon's results are poised to benefit from a rapidly growing network security solutions market. The ongoing transition to cloud and fast adoption of Internet of Things (IoT) technologyalsopresents significant growth potential.

Going forward, the company focuses on the go to market strategies. It expects third-quarter revenues to be in the range of $84-$88 million.

Gigamon Inc. Price and EPS Surprise

Gigamon Inc. Price and EPS Surprise | Gigamon Inc. Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Gigamon is likely beat the Zacks Consensus Estimate in its upcoming release. This is because a stock needs to have both a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:  Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 23 cents.You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank:  Gigamon Paper has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

NVIDIA Corporation NVDA has an Earnings ESP of +1.06% and a Zacks Rank #1. You can see  the complete list of today's Zacks #1 Rank stocks here .

Applied Materials, Inc. AMAT has an Earnings ESP of +0.37% and a Zacks Rank #1.

Intel Corporation INTC has an Earnings ESP of +0.06% and a Zacks Rank #1.

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: INTC , NVDA , AMAT

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