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Adobe Systems (ADBE): A Surprise in Q2 Earnings Release?
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Adobe Systems Incorporated (ADBE - Free Report) is slated to report second-quarter fiscal 2016 results on Jun 21. Last quarter, the company recorded a positive earnings surprise of 10.64%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Adobe is being driven by continuous innovation in the Creative Cloud and Marketing Cloud businesses.
The Creative business under the Digital Media Solutions segment is seeing acceleration in Creative Cloud subscriptions. Also, the conversion of enterprise customers to Enterprise Term License Agreements (ETLAs) is resulting in higher adoption of its enterprise Creative Cloud offering.
Increased subscription, ETLA adoption and digital publishing suite adoption should drive Creative’s annualized recurring revenues.
We remain positive about Adobe’s market position, its compelling product lines, continued innovation and strong balance sheet. In addition, we believe that consistent adoption of the Adobe marketing cloud could serve as a catalyst in the to-be-reported quarter.
Adobe posted strong first-quarter results wherein both earnings and revenues beat the Zacks Consensus Estimate. Revenues were up 5.9% sequentially and 24.7% year over year, driven by strong adoption of Creative Cloud.
However, lower end-market demand, increasing competition from Microsoft (MSFT - Free Report) and Apple and significant exposure to Europe could be a matter of concern.
For fiscal second quarter, Adobe expects revenues in the range of $1.365–$1.415 billion. Based on a share count of 506–508 million, GAAP earnings are expected within 42–48 cents per share, while non-GAAP earnings are expected in the range of 64–70 cents.
Earnings Whispers
Our proven model does not conclusively show that Adobe will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 52 cents. Hence, the difference is 0.00%.
Zacks Rank: Adobehas a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks, which you may want to consider as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Accenture plc (ACN - Free Report) , with an Earnings ESP of +0.71% and a Zacks Rank #2.
DBV Technologies S.A. (DBVT - Free Report) , with an Earnings ESP of +12.68% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
See More Zacks Research for These Tickers
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Adobe Systems (ADBE): A Surprise in Q2 Earnings Release?
Adobe Systems Incorporated (ADBE - Free Report) is slated to report second-quarter fiscal 2016 results on Jun 21. Last quarter, the company recorded a positive earnings surprise of 10.64%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Adobe is being driven by continuous innovation in the Creative Cloud and Marketing Cloud businesses.
ADOBE SYSTEMS Price and EPS Surprise
ADOBE SYSTEMS Price and EPS Surprise | ADOBE SYSTEMS Quote
The Creative business under the Digital Media Solutions segment is seeing acceleration in Creative Cloud subscriptions. Also, the conversion of enterprise customers to Enterprise Term License Agreements (ETLAs) is resulting in higher adoption of its enterprise Creative Cloud offering.
Increased subscription, ETLA adoption and digital publishing suite adoption should drive Creative’s annualized recurring revenues.
We remain positive about Adobe’s market position, its compelling product lines, continued innovation and strong balance sheet. In addition, we believe that consistent adoption of the Adobe marketing cloud could serve as a catalyst in the to-be-reported quarter.
Adobe posted strong first-quarter results wherein both earnings and revenues beat the Zacks Consensus Estimate. Revenues were up 5.9% sequentially and 24.7% year over year, driven by strong adoption of Creative Cloud.
However, lower end-market demand, increasing competition from Microsoft (MSFT - Free Report) and Apple and significant exposure to Europe could be a matter of concern.
For fiscal second quarter, Adobe expects revenues in the range of $1.365–$1.415 billion. Based on a share count of 506–508 million, GAAP earnings are expected within 42–48 cents per share, while non-GAAP earnings are expected in the range of 64–70 cents.
Earnings Whispers
Our proven model does not conclusively show that Adobe will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 52 cents. Hence, the difference is 0.00%.
Zacks Rank: Adobehas a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks, which you may want to consider as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Accenture plc (ACN - Free Report) , with an Earnings ESP of +0.71% and a Zacks Rank #2.
DBV Technologies S.A. (DBVT - Free Report) , with an Earnings ESP of +12.68% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>