Markets

What's in Store for Netgear (NTGR) this Earnings Season?

Netgear Inc.NTGR is set to report third-quarter 2015 results on Oct 22. Last quarter, the company posted an 8.70% negative earnings surprise. The company has posted an average positive earnings surprise of 1.76% over the past four quarters.

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

Factors to Consider

We believe that Netgear's strength in its retail business will primarily drive results. Additionally, a strong product portfolio, comprising offerings like Arlo smart home security-cameras and Nighthawk routers and gateways, is expected to boost the top line going forward.

However, the company's ongoing restructuring of its service provider business is likely to hurt operating profits in the near term. In addition, Netgear's business is likely to be affected if any of its products get exposed to malware. Last week, the company's Netgear SOHO (Small Office Home Office) routers were compromised because of a large scale hack.

Earnings Whispers

Our proven model does not conclusively show that Netgear 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. This is not the case here as you will see below.

Zacks ESP: Netgear currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents per share.

Zacks Rank: Netgear has a Zacks Rank #3 (Hold), which when combined with a 0.00% ESP, makes surprise prediction difficult.

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

Stocks to Consider

Here are some stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

  • Visa Inc. V with an Earnings ESP of +16.13% and a Zacks Rank #1 (Strong Buy)
  • Fiserv, Inc. FISV with Earnings ESP of + 3.09% and a Zacks #2 (Buy).
  • Apple Inc. AAPL with Earnings ESP of +1.60% and a Zacks Rank #3

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NETGEAR INC (NTGR): Free Stock Analysis Report

VISA INC-A (V): Free Stock Analysis Report

FISERV INC (FISV): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

FISVVNTGRAAPL

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More