Broadridge Financial Solutions Inc.BR is scheduled to report first-quarter fiscal 2016 results on Nov 5. Last quarter, the company posted a positive earnings surprise of 1.45%.
Let us see how things are shaping up for this announcement.
Factors to Consider
Broadridge is a leading global provider of technology-based outsourcing solutions to the financial services industry. We are optimistic about the company's strategic acquisitions, product launches, share repurchase program and dividend payouts, which should positively impact first-quarter results. We also believe that the company's close association with Accenture ACN will be beneficial over the long term.
However, pricing pressure caused by stiff competition from the likes of Barrett Business Services and DST Systems may impact profitability in the to-be-reported quarter.
Our proven model does not conclusively show that Broadridge will beat earnings this quarter. That 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. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Broadridge is -3.57%. This is because the Most Accurate estimate stands at 27 cents per share which is lower than the Zacks Consensus Estimate of a loss of 28 cents.
Zacks Rank: Broadridge's Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about a positive 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.
Stocks to Consider
Here are a couple of companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Facebook Inc. FB , with an Earnings ESP of +5.71% and a Zacks Rank #1.
CyberArk Software Ltd. CYBR , with an Earnings ESP of +10.00% and a Zacks Rank #2.
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