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Chegg, Inc. (CHGG - Snapshot Report) is set to report second-quarter fiscal 2014 results on Aug 4, after market closes. Last quarter, it posted a positive surprise of 14.3%. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

As a student-first connected learning platform, Chegg started the year on a strong note, beating both revenue and earnings estimates in the first quarter of 2014. The company has been benefiting from the introduction of new products and expansion of its services to students. This trend is expected to continue in the second quarter.

The company expects second quarter revenues in the range of $61 million to $65 million. Digital revenue is expected to represent 30% to 31% of total revenue. Gross margin is expected to be about 36%. Adjusted EBITDA is expected to range between $(2) million and $2 million.

California-based Chegg expects fiscal 2014 revenue to range between $310 million and $320 million. Digital revenue is expected to represent 28% to 30% of total revenue. Margin is expected to range between 27% and 29%. Adjusted EBITDA is expected to range between ($10) million and $5 million.

However, the company has been incurring losses for the last two quarters, a trend which is likely to continue in the upcoming quarter.

Earnings Whisper?

Our proven model does not conclusively show that Chegg is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP  and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Chegg is 0.00%.

Zacks Rank: Chegg’s Zacks Rank #3 (Hold) when combined with a 0.00% 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

Here are some other companies in the service sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Constant Contact, Inc. (CTCT - Snapshot Report), Earnings ESP of +4.8% and a Zacks Rank #2 (Buy).

United Rentals, Inc. (URI - Snapshot Report), Earnings ESP of +2.4% and a Zacks Rank #2.

DTS Inc. (DTSI - Snapshot Report), Earnings ESP of +66.7% and a Zacks Rank #3.

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