Teradata Corp.TDC is set to report third-quarter 2015 results on Nov 5. Last quarter, the company posted a 7.84% negative earnings surprise. The company has posted an average negative earnings surprise of 10.18% over the past four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Teradata is a leading provider of data warehousing and enterprise analytics. For the 15th consecutive year, the company has been categorized as a leader in Gartner's Magic Quadrant for Data Warehouse Database Management Systems, followed by Oracle ORCL and International Business Machines Corporation IBM . The company is well positioned to benefit from the robust growth in data warehousing market based on a strong product portfolio, new customer wins, strategic partnerships and accretive acquisitions.
We believe that new customer wins and strengthening relationships with large vendors will be the primary revenue drivers. Teradata's international expansion, improved traction from sales force expansion, new products and alliances, market share gains and a growing database analytics market should be another set of positives for the company.
However, sluggish spending environment in the domestic market and intensifying competition from peers continue to weigh on results.
Our proven model does not conclusively show that Teradata is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Its Earnings ESP is -4.00%. This is because the Most Accurate estimate stands at 48 cents while the Zacks Consensus Estimate is pegged higher at 50 cents per share.
Zacks Rank: Teradata carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stock to Consider
Here is a company, which you may consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:
Agilent Technologies Inc. A , with an Earnings ESP of +2.13% and a Zacks Rank #2 (Buy).
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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.