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Will Netgear's (NTGR) Earnings in Q3 Top Estimates?

Netgear Inc. NTGR is set to report third-quarter 2016 results on Oct 26. Last quarter, the company posted a positive earnings surprise of 22.00%. The company has posted an average positive earnings surprise of 26.76% over the past four quarters.

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

Factors to Consider

Netgear designs technologically advanced, branded networking products that address the specific needs of small businesses and home users. 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.

We believe that Netgear's strength in its retail business will primarily drive results. Region wise, North America continues to be strong.

However, the service provider business continues to pose challenges with the company streamlining this segment. In the second quarter, segment revenues plunged as much as 28.3% year over year.

For the third quarter, the company expects revenues of $315 million to $330 million. Non GAAP operating margin is expected to be around 10.5% to 11.5%.

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 (Strong Buy), 2 (Buy) or 3 (Hold) 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 63 cents per share. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Netgear has 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 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

NETGEAR INC Price and EPS Surprise

NETGEAR INC Price and EPS Surprise | NETGEAR INC Quote

Stocks to Consider

Here are a few stocks worth considering that, as per our model, havethe right combination of elements to post an earnings beat this quarter:

Amazon.com, Inc. AMZN with an Earnings ESP of +10.47% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Mercadolibre, Inc. MELI with an Earnings ESP of +8.24% and a Zacks Rank #1

Imperva Inc. IMPV with an Earnings ESP of +20.64% and a Zacks Rank #3.

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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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