Back to top

Analyst Blog

We expect storage solutions provider Equinix Inc. (EQIX - Analyst Report) to beat expectations when it reports fourth-quarter 2013 results on Feb 19.

Why a Likely Positive Surprise?

Our proven model shows that Equinix is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate (88 cents) and the Zacks Consensus Estimate (78 cents), stands at +12.82%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of Equinix’s Zacks Rank #3 and +12.82% ESP makes us very confident in looking for an earnings beat.

What is Driving the Better-Than-Expected Earnings?

Equinix’s data center platform has been popular in the financial services, networking and content management industries. Equinix has taken advantage of the fact that many firms in these industries are setting up their bases in South America. Considering the growth prospects in the region, particularly in Brazil, we believe that Equinix will be able to secure a solid revenue stream. Moreover, Equinix is also expected to gain from its recent alliances and its proposed conversion to Real Estate Investment Trust (REIT).

On the other hand, the company's highly leveraged balance sheet and competitive threats from the likes of AT&T Inc. (T - Analyst Report) remain the primary concerns.

It is noteworthy that Equinix has delivered a positive earnings surprise of 28.1% in the last quarter with an average four quarter positive surprise of 13.1%.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Hewlett-Packard Company (HPQ - Analyst Report) has an Earnings ESP of +1.18% and holds a Zacks Rank #2 (Buy).

Westlake Chemical Corp. (WLK - Snapshot Report) has an Earnings ESP of +4.51% and holds a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%