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What's in Store for Glu Mobile (GLUU) This Earnings Season?

Glu Mobile, Inc.GLUU , a developer of gaming applications for smartphone and tablets, is set to release third-quarter 2015 results on Nov 5. The company reported a positive earnings surprise of 71.43% in the last reported quarter. Furthermore, the company has delivered positive earnings surprises in the trailing four quarters with an average beat of 161.61%.

Let's see how things are shaping up for this announcement.

Factors to Consider

This time around Glu Mobile is likely to benefit from the update to the hugely successful Kim Kardashian: Hollywood . Last quarter, Glu Mobile witnessed strong growth in both the top and bottom line driven by its strong portfolio, including Kim Kardashian: Hollywood and Racing Rivals . In fact, in the second-quarter, Kim Kardashian: Hollywood generated 30% of the company's revenues.

In addition, in September, the company also released the new Deer Hunter 2016, which is likely to be a growth driver this quarter. However, there has been some softness in games like Contract Killer: Sniper which can have some impact on the financials.

Also, growing competition from established players like Electronic Arts EA and Activision ATVI might make it difficult for the company to register strong growth in the near term. Further, significant investment in research and development of new games will likely be a headwind for the company, putting pressure on margins.

Earnings Whispers?

Our proven model does not conclusively show that Glu Mobile 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: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 4 cents.

Zacks Rank: Glu Mobile carries a Zacks Rank #2 (Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stock to Consider

Here is a company, which you may consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Popeyes Louisiana Kitchen, Inc. PLKI , with an Earnings ESP of +2.27% and a Zacks Rank #1 (Strong Buy)

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GLU MOBILE INC (GLUU): Free Stock Analysis Report

ACTIVISION BLZD (ATVI): Free Stock Analysis Report

ELECTR ARTS INC (EA): Free Stock Analysis Report

POPEYES LA KTCH (PLKI): 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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