Tech Data Corp.TECD is set to release fourth-quarter and full-year 2015 financial results on Mar 19. Last quarter, the company posted a positive earnings surprise of 24.21%. The company has delivered positive surprises in three of the trailing four quarters, with an average beat of 13.42%. Let us see how things are shaping up for this announcement.
Factors to Consider
In the last reported quarter, Tech Data reported impressive results with both earnings and revenues ahead of expectations.
In this quarter, the company introduced a number of new products and also won contracts and collaborated with the likes of AT&T, Inc. T , Springpath, Reticare, EMC and Microsoft MSFT , which are likely to drive growth going forward. The company also launched its Mobility Solutions and Retail division to enhance its business.
However, sluggish IT spending remains a concern. Moreover, Tech Data's performance will significantly depend on demand for personal computers.
For the fourth quarter, management expects low single-digit sales growth in both regions in local currency. This is assuming a non-GAAP effective tax rate of 27% to 29% and the average U.S. dollar to euro currency exchange rate of $1.27 to €1.00.
Our proven model does not conclusively show that Tech Data is likely to beat earnings in the to-be reported quarter. That 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: Tech Data has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $2.04 per share.
Zacks Rank: Tech Data carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 or lower going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Another Stock to Consider
Here is a stock, which according to our model, has the right combination of elements to post an earnings beat.
CACI International Inc. CACI with an Earnings ESP of +1.56% and a Zacks Rank #3.
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