NetApp Inc. NTAP is set to report first-quarter fiscal 2017 results on Aug 17. Last quarter, the company reported a negative earnings surprise of 10%. Let's see how things are shaping up for this announcement.
Factors to Consider
NetApp posted dismal results for the fiscal fourth quarter wherein its top and bottom line results compared unfavorably with the year-ago quarter figures.
Nonetheless, the company is expected to gain momentum in flash-based solutions with the newly introduced all-flash array, which will help it to gain traction in the storage market. The recent product launches and refreshes will drive revenues while stringent cost controls will facilitate margin expansion in the to-be-reported quarter.
However, the recent forecast for worldwide IT spending by Gartner raises concerns about NetApp's near-term performance. Competition from EMC Corp. EMC and HP Inc. add to its woes.
NETAPP INC Price and EPS Surprise
Our proven model does not conclusively show that NetApp will beat earnings this quarter. 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. However, that is not the case here, as you will see below.
Zacks ESP: The, Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, currently stands at 0.00%. This is because the Most Accurate estimate of 18 cents is in line with the Zacks Consensus Estimate.
Zacks Rank: NetApp has a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are a couple of stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The J. M. Smucker Company SJM , with an Earnings ESP of +2.87% and a Zacks Rank #3
Deere & Company DE , with an Earnings ESP of +5.26% and a Zacks Rank #3