MongoDB (MDB) is a Zacks Rank #5 (Strong Sell) despite recently beating the Zacks Consensus Estimate. The stock has a Zacks Style Score for Value of f and an A for Growth. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
MongoDB (MDB) engages in the development and provision of a general-purpose database platform. The firm's products include MongoDB Enterprise Advanced, MongoDB Atlas, and Community Server. It also offers professional services including consulting and training. The company was founded by Eliot Horowitz, Dwight A. Merriman, Kevin P. Ryan, and Geir Magnusson Jr. in November 2007 and is headquartered in New York, NY.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of MongoDB (MDB) I see the company has beaten the Zacks Consensus Estimate in each of the last four quarters. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
The most recent earnings report from MongoDB (MDB) saw the company post $1.65 in EPS when the Zacks Consensus Estimate was calling for $1.47. That 18 cent beat translates to a 12.2% positive earnings surprise.
Earnings Estimate Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For MongoDB (MDB) I see annual estimates for next year moving higherof late.
The current fiscal year consensus number has increased from $5.61 to $5.83 over the last 60 days.
The next fiscal year has also estimates increasing from $6.83 to $6.94 over the last 60 days.
Negative movement in earnings estimates are the primary is why this stock is a Zacks Rank #5 (Strong Sell). That said, sometimes the Agreement section can push the rank lower if there is a large discrepancy. In the case of MongoDB (MDB) the current quarter has seen 6 estimate decreases and 3 estimate increases over the last 60 days.
It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
