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What's in Store for AppFolio (APPF) This Earnings Season?

AppFolio, Inc.APPF is set to report third-quarter 2015 results on Nov 9. Let's see how things are shaping up for this announcement.

Factors to Consider

AppFolio offers online management software applications to small and medium-sized property management and legal companies.

AppFolio launched its IPO on Jun 26 and now trades under the symbol APPF. The company offered 6.2 million shares at a rate of $12 per share and expected the net proceeds in the range of $71.4 million and $82.6 million.

Notably, the company plans to use the money to increase its financial flexibility and workforce as well as for investment in research and development.

The company's second-quarter 2015 revenues saw a 59% year-over-year increase to $18.4 million from $11.6 million. Unfortunately, the company has had a history of incurring losses. In the last quarter, it posted a loss of $3.4 million compared with a loss of $3.2 million reported in the year-ago quarter.

Nevertheless, the company has been able to significantly increase its revenue on a year-over-year basis and the trend should continue in the to-be-reported quarter as well. The software solutions market for small-to-medium sized businesses is projected to double to $125 billion between now and 2016. If the company can improve its profitability, it can be a valuable tech stock, going ahead.

Earnings Whispers

Our proven model does not conclusively show that AppFolio 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 15 cents. Hence, the difference is 0.00%.

Zacks Rank: AppFolio's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

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.

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:

Canadian Solar Inc. CSIQ , with an Earnings ESP of +29.63% and a Zacks Rank #2.

Inter Parfums Inc. IPAR , with an Earnings ESP of +15.00% and a Zacks Rank #2.

CoLucid Pharmaceuticals Inc. CLCD , with an Earnings ESP of +11.27% and a Zacks Rank #2.

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APPFOLIO INC-A (APPF): Free Stock Analysis Report

CANADIAN SOLAR (CSIQ): Free Stock Analysis Report

INTER PARFUMS (IPAR): Free Stock Analysis Report

COLUCID PHARMA (CLCD): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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