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What's in the Offing for SolarWinds' (SWI) Q4 Earnings?
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SolarWinds Corp. (SWI - Free Report) is expected to release fourth-quarter 2020 results on Feb 2.
For the quarter, the company projects revenues between $261 million and $266 million, suggesting year-on-year growth of 5-7%. The Zacks Consensus Estimate is pegged at $261.39 million, indicating a year-over-year increase of 5.61%.
Non-GAAP earnings are expected to be 25 cents per share. The Zacks Consensus Estimate for quarterly earnings is pinned at 25 cents per share, suggesting a 4.17% rise year on year.
The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same on one occasion, the average surprise being 11.5%.
Let’s see how things have shaped up for the upcoming announcement.
Factors at Play
Disciplined expense management is expected to have been a tailwind for SolarWinds’ fourth-quarter 2020 results.
Moreover, in its previous earnings call, management had revealed that it expects strong cyclical growth in subscription sales of the Orion product family in the fourth quarter.
However, adjusted EBITDA margins are likely to remain low in the fourth quarter, as the company is planning to increase its go-to-market spending and hiring across the business, as the industries are slowly recovering from coronavirus-led disruptions.
Furthermore, management expects a year-over-year decline in license revenues. The company had forecasted that its Orion product portfolio subscription sales might hurt license revenue growth by approximately four percentage points in the fourth quarter.
What Our Model Says
Our proven model does not predict an earnings beat for SolarWinds this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
SolarWinds currently has a Zacks Rank of 5 (Strong Sell) and an Earnings ESP of -3.35%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:
Qorvo, Inc. (QRVO - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank of 2, currently.
Facebook, Inc. has an Earnings ESP of +0.88% and currently, a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
What's in the Offing for SolarWinds' (SWI) Q4 Earnings?
SolarWinds Corp. (SWI - Free Report) is expected to release fourth-quarter 2020 results on Feb 2.
For the quarter, the company projects revenues between $261 million and $266 million, suggesting year-on-year growth of 5-7%. The Zacks Consensus Estimate is pegged at $261.39 million, indicating a year-over-year increase of 5.61%.
Non-GAAP earnings are expected to be 25 cents per share. The Zacks Consensus Estimate for quarterly earnings is pinned at 25 cents per share, suggesting a 4.17% rise year on year.
SolarWinds Corp. Price and EPS Surprise
SolarWinds Corp. price-eps-surprise | SolarWinds Corp. Quote
The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same on one occasion, the average surprise being 11.5%.
Let’s see how things have shaped up for the upcoming announcement.
Factors at Play
Disciplined expense management is expected to have been a tailwind for SolarWinds’ fourth-quarter 2020 results.
Moreover, in its previous earnings call, management had revealed that it expects strong cyclical growth in subscription sales of the Orion product family in the fourth quarter.
However, adjusted EBITDA margins are likely to remain low in the fourth quarter, as the company is planning to increase its go-to-market spending and hiring across the business, as the industries are slowly recovering from coronavirus-led disruptions.
Furthermore, management expects a year-over-year decline in license revenues. The company had forecasted that its Orion product portfolio subscription sales might hurt license revenue growth by approximately four percentage points in the fourth quarter.
What Our Model Says
Our proven model does not predict an earnings beat for SolarWinds this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
SolarWinds currently has a Zacks Rank of 5 (Strong Sell) and an Earnings ESP of -3.35%.
Stocks With Favorable Combinations
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:
Vishay Intertechnology, Inc. (VSH - Free Report) has an Earnings ESP of +4.82% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Qorvo, Inc. (QRVO - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank of 2, currently.
Facebook, Inc. has an Earnings ESP of +0.88% and currently, a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>