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Workday Inc.(WDAY - Snapshot Report) is set to report fiscal second quarter 2014 results after the closing bell on Aug 27, 2013. Last quarter, it posted a 13.0% positive surprise with a trailing four-quarter average negative surprise of 16.5%. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Workday’s first quarter revenue growth was mostly driven by strength across all the segments, particularly Subscription. Subscription revenues surged 85.3% year over year, whereas Professional revenues increased 16.7% year over year to $23.2 million. The company ended the first quarter with more than 450 customers in total, of which 290 are live on Workday applications.

However, operating expenses rose sharply to $87.6 million from $51.7 million reported in the year-ago quarter due to a 113.2% increase in general & administrative expense, 74.6% rise in research & development expense and a 54.5% jump in sales & marketing expense. Net loss (including stock-based compensation) was $33.0 million compared with $20.0 million loss in the year-ago quarter.

Earnings Whispers?

Our proven model does not conclusively show that Workday will beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: That is because the Most Accurate estimate stands at 25 cents loss per share while the Zacks Consensus Estimate is at 24 cents loss per share. That is a difference of -4.17%.

Zacks Rank #3 (Hold): Workday has a Zacks Rank #3 (Hold). The Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. But we caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Investors can consider other stocks with a positive ESP and a favorable Zacks Rank including:

Inteliquent Inc. (IQNT - Snapshot Report), with Earnings ESP of +66.7% and Zacks Rank #1 (Strong Buy)

Fuel System Sol.(FSYS - Snapshot Report), with Earnings ESP of +25.0% and Zacks Rank #1 (Strong Buy)

Ingram Micro(IM - Analyst Report), with Earnings ESP of +1.9% and Zacks Rank #2 (Buy)

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