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What's in the Cards for Workiva (WK) this Earnings Season?

Workiva Inc.WK is set to release its fourth-quarter 2016 earnings on Feb 23. In the last quarter, the company reported a positive earnings surprise of 25.58%. We note that the company has delivered positive surprises in each of the last four quarters resulting in an average positive surprise of 23.97%.

The company reported a non-GAAP net loss of 32 cents per share in third-quarter 2016 that was narrower than the Zacks Consensus Estimate of a loss of 43 cents.

Workiva offers a cloud-based and mobile-enabled platform, Wdesk for enterprises to collect, manage, report and analyze critical business data in real time. The company reported a loss of 32 cents per share in the third-quarter that was narrower than the Zacks Consensus Estimate that stood at a loss of 43 cents.

However, improving results failed to provide significant momentum to the share price. We note that Workiva has underperformed the Zacks Internet Software industry over the last one year. While the industry gained 18.5%, the stock returned only 11.2% over the same period.

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

Factors to Consider

Workiva recently announced that its Wdesk platform enjoyed steady demand as evident from the fact that companies like Meredith Corporation and MFA Cornerstone Consulting continued to use the platform to streamline their collaborations and enhance compliance efficiencies.

The company collaborated with Frazier and Deeter so as to help the latter upgrade its risk, governance and compliance processes through the use of Wdesk. Also, Workiva partnered with Business Wire to enable its Wdesk platform users seamlessly file their SEC reports.

In October, the Wdesk platform was adopted by the State University System of Florida for streamlining tuition and fees reporting.

We can surmise that Workiva's Wdesk platform is gaining traction in the market, which remains a positive for the company and the impact is likely to be reflected in its bottom line in the soon-to-be reported quarter.

However, a competitive landscape with the presence of major document creation vendors such as Microsoft MSFT and Google remains a concern for Workiva in the soon-to-be reported quarter.

Earnings Whispers?

Our proven model does not conclusively show that Workiva 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: Workiva's Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 30 cents per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Workiva carries a Zacks Rank #3, 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) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Workiva Inc. Price and EPS Surprise

Workiva Inc. Price and EPS Surprise | Workiva Inc. Quote

Stocks to Consider

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

Pure Storage, Inc. PSTG with an Earnings ESP of +4.17% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

ARRIS International plc ARRS with an Earnings ESP of +1.56% and a Zacks Rank #2.

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Workiva Inc. (WK): 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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