What's in Store for F5 Networks (FFIV) This Earnings Season?

F5 Networks FFIV is set to report fourth-quarter fiscal 2020 results on Oct 26.

For the fiscal fourth quarter, F5 Networks estimates revenues of $595-$615 million (mid-point $605 million). The Zacks Consensus Estimate for revenues is pegged at $607.1 million, suggesting year-over-year growth of 2.8%.

The company anticipates non-GAAP earnings of $2.30-$2.42 per share (mid-point $2.36). The Zacks Consensus Estimate is pinned at $2.38 per share, indicating a year-over-year decline of 8.1%.

The company’s earnings surpassed estimates in all of the trailing four quarters, the average beat being 6.2%.

Let’s see how things have shaped up for the upcoming announcement.

Factors at Play

The COVID-19 pandemic-induced work-from-home and online-learning wave globally is spurring demand for secured communication networks. We anticipate this new trend to have aided F5 Networks’ quarterly performance.

F5 Networks, Inc. Price and Consensus

F5 Networks, Inc. Price and Consensus

F5 Networks, Inc. price-consensus-chart | F5 Networks, Inc. Quote

F5 Networks is also likely to have benefited from its focus on transitioning the business to a software-driven model. Increasing demand for multi-cloud application services is expected to have been a key growth driver.

Rising traction of the Enterprise License Agreement (ELA) and annual subscriptions by customers are likely to have boosted software growth. This, in turn, is anticipated to have aided product revenue growth. The Zacks Consensus Estimate for product revenues is pinned at $250 million, suggesting marginal improvement from the year-ago reported figure of $270 million.

Moreover, the top line is expected to have benefited from significant contributions from NGINX, which was acquired by F5 Networks in the third quarter of fiscal 2019.

Furthermore, the coronavirus crisis is expected to have had a minimal impact on F5 Networks’ business during the fiscal fourth quarter thanks to its efficient inventory management.

However, organizations are pushing back their big and expensive technology products due to the slowdown in global economic growth, which might have hurt the company’s fiscal fourth-quarter revenues. Additionally, as more and more organizations continue shifting to cloud computing owing to the maintenance-free and cost-effective nature, F5 Networks’ hardware business is likely to have seen a declining trend during the quarter under review as well.

What Our Model Says

Our proven model does not predict an earnings beat for F5 Networks this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

F5 Networks currently carries a Zacks Rank of 4 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Vishay Intertechnology, Inc. VSH has an Earnings ESP of +6.45% and flaunts a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alphabet GOOGL has an Earnings ESP of +7.40% and carries a Zacks Rank of 2, currently.

AMETEK, Inc. AME has an Earnings ESP of +0.83% and currently carries a Zacks Rank of 2.

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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.

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