Dun & Bradstreet Corp . DNB is set to report first-quarter 2016 results on May 9. Last quarter, it posted a 0.70% positive earnings surprise. Moreover, if we look at the trailing four quarters, the company has posted an average positive surprise of 3.55%.
Let's see how things are shaping up for this announcement.
Factors to Consider
We believe that Dun & Bradstreet's strong product portfolio and innovative product pipeline are major positives going forward. The company has been launching new solutions, which leverage the benefits of its data and analytics capabilities. Over the past few months, the company unveiled as many as 19 new scores with improved predictive capabilities to offer better risk assessment to customers.The completion of the MaxCV technology investment has enabled the company to process new data sources at a much faster and accurate pace compared with the traditional approach.
In addition, international growth potential, strategic investments, partnerships, accretive cloud-based acquisitions and aggressive share buyback will drive earnings in the long run.
However, increasing competition from companies such as IHS Inc and FactSet Research Systems Inc FDS will continue to hurt revenues and profitability in the near term. Moreover, higher debt level remains a concern.
Our proven model does not conclusively show that Dun & Bradstreet 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: Dun & Bradstreet has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 94 cents per share.
Zacks Rank: Dun & Bradstreet has a Zacks Rank #2 (Buy), 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.
Stocks to Consider
Here are a few stocks, which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Electronic Arts Inc. EA has an Earnings ESP of +6.67% and a Zacks Rank #3 (Hold).
Agilent Technologies, Inc. A has an Earnings ESP of +2.56% and a Zacks Rank #3.