F5 Networks, Inc.FFIV is slated to release its first-quarter fiscal 2018 results on Jan 24. The question lingering on investors' minds is whether this Internet traffic manager will be able to post a positive earnings surprise this time around.
Notably, F5 Networks has a mixed earnings surprise history. In the trailing four quarters, the stock has surpassed the Zacks Consensus Estimate twice, matched the same once and fallen short of it on one occasion. It has an average positive earnings surprise of 3.1%.
Let's see how things are shaping up prior to this announcement.
What to Expect?
The Zacks Consensus Estimate for the first quarter is pegged at $2.04, which represents a meager 3% increase from the year-ago figure. We note that the Zacks Consensus Estimate has remained unchanged over the past 30 days. Additionally, analysts polled by Zacks project revenues of roughly $521.5 million, up just 1.1% from the year-ago quarter.
What the Zacks Model Unveils?
Our proven model does not conclusively show that F5 Networks is likely to beat earnings this quarter as it does not possess the key components. 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. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
F5 Networks carries a Zacks Rank #3 and has an Earnings ESP of -1.05%.
Factors to Consider
A volatile spending environment and increasing competition remain headwinds for F5 Networks' revenue growth. Notably, Cisco Systems (CSCO) poses the most significant competitive threat to F5 Networks, given the dominance of the former in the overall networking market. Cisco has tremendous engineering and marketing resources at its disposal.
Although F5 Networks' technology leads in the networking market, Cisco has become more competitive, given its aggressive investment in this space. Additionally, Citrix Inc., Juniper Networks, Checkpoint Systems, and Barracuda Networks also have strong technology platforms that are posing significant competitive threat.
Also, F5 Networks continues to acquire a large number of companies. While this improves revenue opportunities, business mix and profitability, it also adds to integration risks. Moreover, frequent acquisitions are a distraction for management, which could impact organic growth in the long run.
Nevertheless, improving software revenues and strength across all business segments along with its product refreshing initiatives are tailwinds. These are expected to expand the company's total addressable market and aid revenue growth.
Additionally, the company is also taking care of its management structure and added two names to its team during the quarter with an aim to improve operational efficiency. We might see the effect of this move in the soon-to-be reported quarter.
F5 Networks, Inc. Price and EPS Surprise
Some Stocks With a Favorable Combination
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Facebook, Inc. FB has an Earnings ESP of +2.04% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
Microsoft Corporation MSFT has an Earnings ESP of +0.83% and a Zacks Rank #2.
Apple Inc. AAPL has an Earnings ESP of +1.12% and a Zacks Rank #3.
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