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Is Another Earnings Beat in the Cards for Logitech (LOGI)?

Logitech International SALOGI is set to report second-quarter fiscal 2016 results on Oct 21. This leading computer peripheral equipments provider delivered a positive surprise of 71.4% in the preceding quarter.

Encouragingly, Logitech has a solid earnings track record over the past few quarters with the company beating earnings estimates in the trailing four quarters. The average earnings surprise over the last four quarters is 65.1%.

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

Factors to Consider

In the last three quarters, Logitech focused on pursuing innovation and expanding its product lines, especially on the gaming industry front. Accordingly, Logitech came up with two new gaming headphones and a tenkeyless mechanical gaming keyboard to spread its wings in the gaming industry. The recent euphoria that has gripped the gaming universe is virtual reality gaming, a gaming type, which not only allows users to enjoy 3D experience in the virtual world but also lets them interact with characters in the game. At such a juncture in the gaming universe, we believe Logitech's latest initiative toward promoting the latest fad of virtual reality gaming is judicious, given its reputation as one of the world leaders in the consumer-peripheral industry.

Apart from these, the company unveiled a family of Logi BLOK cases for Apple's AAPL iPad under its newly formed Logi label . Additionally, ushering in the good news for shareholders, Logitech showed the green signal to its previously proposed dividend hike plan at its annual general meeting.

However, Logitech's business is prone to be affected by the negative impact of currency translation as the company derives the highest portion of its revenues from outside the Americas. Also, weaknesses in political and macroeconomic conditions, especially in Russia and Ukraine, remain among the top concerns.

Earnings Whispers?

However, our proven model does not conclusively show that Logitech is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP : Earnings ESP, that represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 18 cents.

Zacks Rank : Logitech's Zacks Rank #2, when combined with 0.00% ESP, makes surprise prediction difficult. Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings.

We caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

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

Voxeljet AG VJET , an Earnings ESP of +7.14% and a Zacks Rank #1.

Imperva Inc. IMPV , an Earnings ESP of +3.92% and a Zacks Rank #3.

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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.


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

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