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Logitech (LOGI): Will it Beat Again This Earnings Season? - Analyst Blog

Logitech International SALOGI is set to report first-quarter fiscal 2015 results on Jul 22. This leading computer peripheral equipments provider delivered a positive surprise of 100.00% 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 101.39%.

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

Factors to Consider

In the last three quarters, Logitech was focused on pursuing innovation and expanding its product lines to tap the high-potential market for accessories. Accordingly, the company came up with a living room keyboard - Logitech Wireless Touch Keyboard K400 Plus ; and a force feedback racing wheel - Logitech G29 Driving Force . Also, Logitech introduced a couple of new products for its Lifesize cloud video conferencing service .

Apart from these, Logitech launched UE ROLL, a wireless Bluetooth speaker of its highly successful Ultimate EARS family. The company's mobile speaker business has remained sturdy over the past one year, driven by strength in the UE BOOM. Encouragingly, this has turned out to be the company's highest selling product for the last few quarters. Such offerings will pave the way for strengthening its top line in the quarter.

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

Earnings Whispers?

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 and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Logitech currently has a negative Earnings ESP because the Most Accurate estimate stands at 6 cents, while the Zacks Consensus Estimate is pegged higher at 7 cents. This equates to a difference of -14.29%.

Zacks Rank: Logitech's Zacks Rank #2 when combined with a negative ESP lowers the predictive power of ESP and makes surprise prediction difficult. Note that stocks with a Zacks Rank of #1, #2 and #3 have a significantly higher chance of beating earnings.

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

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:

NuStar Energy LP NS , an Earnings ESP of + 10.71% and a Zacks Rank #1.

Fair Isaac Corporation FICO , an Earnings ESP of +12.50% and a Zacks Rank #2.

Dave & Buster's Entertainment, Inc. PLAY , an Earnings ESP of +4.55% and a Zacks Rank #1.

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NUSTAR ENERGY (NS): Free Stock Analysis Report

LOGITECH INTL (LOGI): Free Stock Analysis Report

FAIR ISAAC INC (FICO): Free Stock Analysis Report

DAVE&BUSTRS ENT (PLAY): Free Stock Analysis Report

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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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