Atlassian Corporation PlcTEAM is set to report third-quarter fiscal 2016 results on May 5. Last quarter, the company posted in-line earnings. Let's see how things are shaping up for this announcement.
Factors at Play
Atlassian is engaged in designing, developing, licensing and maintenance of software and the provisioning of software hosting services. It offers tools for software developers consisting of FishEye, Bamboo and SourceTree. Atlassian is headquartered in Sydney, Australia.
Atlassian held its IPO on Dec 9, 2015. The company posted modest second-quarter 2016 results, with its top line surpassing the Zacks Consensus Estimate and the bottom line matching the same.
We believe that continuous investments in product development (mainly the launch of three purpose-built versions of JIRA products) coupled with higher total customer count on an active subscription or maintenance agreement are a few of the positives.
Our proven model does not conclusively show that Atlassian is likely to beat the Zacks Consensus Estimate in its upcoming release. 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. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Atlassian is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 4 cents per share.
Zacks Rank: Atlassian has a Zacks Rank #3 (Hold). 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.
Stocks to Consider
Here are some companies, which are worth considering as our model shows that they have the right combination of the two elements needed to post an earnings beat:
- Synopsys Inc. SNPS , with an Earnings ESP of +6.38% and a Zacks Rank #1 (Strong Buy)
- Fitbit Inc. FIT , with an Earnings ESP of +175.00% and a Zacks Rank #2 (Buy)
- Benefitfocus, Inc. BNFT , with an Earnings ESP of +4.00% and a Zacks Rank #2