GoDaddy Inc.GDDY is expected to beat expectations when it reports fourth-quarter 2016 results on Feb 15. It will be interesting to watch if a likely beat drives the company's share price.
Over the past one year, shares of GoDaddy outperformed the Zacks categorized Internet Services Delivery industry. While the industry gained 31.66%, the stock returned 44.89%.
Why a Likely Positive Surprise?
Our proven model shows that GoDaddy is likely to beat on earnings because it has the right combination of the two key ingredients.
Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +12.50%. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank: GoDaddyhas a Zacks Rank #3 (Hold).
Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of GoDaddy's Zacks Rank #3 and +12.50% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
GoDaddy is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals and individuals. GoDaddy's strong market position, increasing investments in products, technology platform and customer care should boost fourth-quarter results. We also expect its focus on delivering innovative and increasingly personalized products and services globally to bear fruit.
Also, the company is striving to expand internationally by investing in technology, marketing programs and customer care teams. Growing international presence and the shift toward dynamic online presence for small business will likely play an important role going forward. Moreover, with product development and more effective ads, the company is trying to establish itself as a serious player.
However, significant competition, heavy debt burden and controversies surrounding the company could pose challenges.
GoDaddy Inc. Price and EPS Surprise
Other Stocks to Consider
GoDaddyis not the only firm looking up this earnings season. We also see a likely earnings beat for each of the following companies:
Applied Optoelectronics AAOI with an Earnings ESP of +15.87% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
Century Communities, Inc. CCS with an Earnings ESP of +14.93% and a Zacks Rank #2.
Entergy Corporation ETR with an Earnings ESP of +9.09% and a Zacks Rank #3.
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