Zynga (ZNGA) to Report Q1 Earnings: What's in the Cards?

Zynga Inc.ZNGA is set to report first-quarter 2017 results on May 4. Last quarter, the company posted a 33.33% negative earnings surprise. Notably, over the trailing four quarters, the company missed estimates in two occasions, met in another and beat in one, resulting in an average negative earnings surprise of 10.83%.

Moreover, we note that Zynga underperformed the Zacks categorized Gaming industry in the last one year. The company's shares increased 21.1% compared with 30.8% growth recorded by the industry during the period.

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

Factors at Play

Zynga is one of the leading game developers and has been seeing strength in the mobile game market. In addition, the company's cost-cutting initiatives are a positive. We expect the top line to be driven by its franchises like Words With Friends and Zynga Poker, as well as new games like CSR Racing 2, FarmVille: Tropic Escape and Dawn of Titans.

However, Zynga has been witnessing a slowdown in its user growth for a while, which remains a major concern. Moreover, a sluggish web business, along with intensifying competition from the likes of Glu Mobile, Electronic Arts EA and Nintendo, remain concerns.

For first-quarter 2017, the company projects GAAP revenues to be approximately $185 million.

Zynga Inc. Price and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively show that Zynga will beat earnings estimates 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 at least 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Zynga is 0.00%. This is because the Most Accurate estimate and Zacks Consensus Estimate are both pegged at loss of a penny. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Zynga carries a Zacks Rank #3. Though this increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

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

Stocks to Consider

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

EGain Corp. EGAN , with an Earnings ESP of +50.00% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Vishay Intertechnology, Inc. VSH , with an Earnings ESP of +4.35% and a Zacks Rank #2.

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Zynga Inc. (ZNGA): Free Stock Analysis Report

eGain Corporation (EGAN): Free Stock Analysis Report

Electronic Arts Inc. (EA): Free Stock Analysis Report

Vishay Intertechnology, Inc. (VSH): 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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