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Symantec Corp. (SYMC - Analyst Report) is slated to report fourth-quarter 2014 results on May 8, 2014. Last quarter, the company delivered a positive 23.08% earnings surprise. Let’s see how things are shaping up for the company prior to the announcement.

Factors to Consider this Past Quarter

In the last reported quarter, Symantec delivered better-than-expected results. Nonetheless, revenues across all its segments declined due to lower-than-expected demand. Re-organization of the sales strategy aided operating margins which in turn supported net income. However, the guidance for the fourth quarter remained tepid but fiscal-year outlook was encouraging.

Although, realignment of the organization’s structure, by eliminating several mid-level management positions, bolstered the bottom line, sales force reorganizations have not yet yielded the desired results. On the other hand, Symantec’s sales were impacted by the disruptions in customer relationships.

Although, we believe that demand for Symantec’s authentication and managed security services (MSS) businesses would lend some support to the top line, continued investments to bring about new and innovative products could also impact margins in the near term. Competition from Intel Corp. (INTC - Analyst Report) and Microsoft (MSFT - Analyst Report) as well as uncertainty over PC sales are going to affect its User Productivity & Production segment.

Earnings Whispers?

Our proven model does not conclusively show that Symantec is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. However, this is not the case here as elaborated below.

Negative Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. The Most Accurate estimate stands at 37 cents while the Zacks Consensus Estimate is higher at 38 cents resulting in an ESP of -2.63%.

Zacks Rank: Symantec’s Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #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

Intuit Inc. (INTU - Snapshot Report), has an Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).

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