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NVIDIA (NVDA) Q2 Earnings: Can the Stock Pull a Surprise?
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NVIDIA Corporation (NVDA - Free Report) is set to report second-quarter fiscal 2017 results on Aug 4. Last quarter, the company posted a positive earnings surprise of 25.81%. Additionally, NVIDIA has surpassed the Zacks Consensus Estimate in all of the four preceding quarters with an average positive surprise of 57.89%.
Let's see how things are shaping up for this announcement.
Factors to Consider
We believe that NVIDIA’s innovative product pipeline, and strength in gaming and high-end notebook GPUs bode well. Going forward, we are also optimistic on higher adoption of the company’s Tegra processors.
It is worth mentioning that NVIDIA’s focus on GRID platforms can drive GPU adoption in data centers, giving it an advantage over its competitors. We believe that its GRID enterprise virtual graphics, which improve visual effects in games, will help drive future revenue and margin growth.
The company has been gaining traction in the gaming industry on the back of a strong line-up of advanced graphics cards such as ‘GeForce GTX 780 Ti’, ‘Maxwell’, the GeForce GT 730, GeForce GT 740, and the new GeForce GTX 750, GeForce GTX 800M, GeForce GTX 970 and GeForce GTX 980, which have made it PC makers’ favorite graphics card provider.
Moreover, according to sources, worldwide PC gaming is growing at a CAGR of 10%. We believe that strong demand for PC gaming are tailwinds for NVIDIA. The company has always generated substantial revenues from its cards because of higher functionality.
Nonetheless, continuous decline in PC sales is a cause of concern for NVIDIA’s GPU segment. Competition from the likes of Intel (INTC - Free Report) and QUALCOMM Inc. add to its woes.
Our proven model does not conclusively show that NVIDIA will beat earnings 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 37 cents. Hence, the difference is 0.00%.
Zacks Rank: NVIDIA has a Zacks Rank #1. Though this increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are a couple of stocks that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Qualys Inc. (QLYS - Free Report) , with an Earnings ESP of +12.50% and a Zacks Rank #3.
CenturyLink Inc. , with an Earnings ESP of +1.70% 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 >>
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NVIDIA (NVDA) Q2 Earnings: Can the Stock Pull a Surprise?
NVIDIA Corporation (NVDA - Free Report) is set to report second-quarter fiscal 2017 results on Aug 4. Last quarter, the company posted a positive earnings surprise of 25.81%. Additionally, NVIDIA has surpassed the Zacks Consensus Estimate in all of the four preceding quarters with an average positive surprise of 57.89%.
Let's see how things are shaping up for this announcement.
Factors to Consider
We believe that NVIDIA’s innovative product pipeline, and strength in gaming and high-end notebook GPUs bode well. Going forward, we are also optimistic on higher adoption of the company’s Tegra processors.
It is worth mentioning that NVIDIA’s focus on GRID platforms can drive GPU adoption in data centers, giving it an advantage over its competitors. We believe that its GRID enterprise virtual graphics, which improve visual effects in games, will help drive future revenue and margin growth.
The company has been gaining traction in the gaming industry on the back of a strong line-up of advanced graphics cards such as ‘GeForce GTX 780 Ti’, ‘Maxwell’, the GeForce GT 730, GeForce GT 740, and the new GeForce GTX 750, GeForce GTX 800M, GeForce GTX 970 and GeForce GTX 980, which have made it PC makers’ favorite graphics card provider.
Moreover, according to sources, worldwide PC gaming is growing at a CAGR of 10%. We believe that strong demand for PC gaming are tailwinds for NVIDIA. The company has always generated substantial revenues from its cards because of higher functionality.
Nonetheless, continuous decline in PC sales is a cause of concern for NVIDIA’s GPU segment. Competition from the likes of Intel (INTC - Free Report) and QUALCOMM Inc. add to its woes.
NVIDIA CORP Price and EPS Surprise
NVIDIA CORP Price and EPS Surprise | NVIDIA CORP Quote
Earnings Whispers
Our proven model does not conclusively show that NVIDIA will beat earnings 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 37 cents. Hence, the difference is 0.00%.
Zacks Rank: NVIDIA has a Zacks Rank #1. Though this increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are a couple of stocks that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Qualys Inc. (QLYS - Free Report) , with an Earnings ESP of +12.50% and a Zacks Rank #3.
CenturyLink Inc. , with an Earnings ESP of +1.70% 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 >>