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Equinix (EQIX): Is a Surprise in the Cards in Q3 Earnings?
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Equinix Inc. (EQIX - Free Report) is set to report third-quarter 2016 results on Nov 2. Last quarter, the company posted a positive earnings surprise of 30.7%. Notably, the stock has underperformed the Zacks Consensus Estimate in three out of the trailing four quarters with an average positive surprise of 5.3%.
Let's see how things are shaping up for this announcement.
Factors at Play
Equinix reported better-than-expected second-quarter results. The company’s top and bottom line results also improved on a year-over-year basis. Revenues were mainly driven by strong demand for cloud services among corporations and benefits of the recently acquired Telecity and Bit-isle businesses. Equinix witnessed revenue growth across all three geographic regions and verticals.
Moreover, the upbeat guidance for full-year 2016 was encouraging. Equinix is presently focusing on improving customer experience through the Equinix Customer One program. We are also optimistic on the company’s recurring revenue model and expansion plans announced in March this year
Recently, Equinix and its Gold Managed Service Provider partner, Synoptek announced a joint effort known as Managed Performance Hub. It is the first ever performance hub that establishes a reliable, secure and private connection to the cloud, which enhances performance and delivers a more consistent network experience. The deal will enable Equinix to address the increasing demand for secure network and quality services from enterprises globally.
Also, Equinix recently revealed its plan to expand operations in the capital of Finland, Helsinki. It intends to open Equinix Internet Exchange in the city by the first quarter of fiscal 2017. This will enable the company to meet the fast-growing demand for Internet usage and data storage capacity.
Equinix operates across various geographical regions and is becoming increasingly popular among major players in the tech industry for data management, which should drive its revenues going ahead.
However, intensifying competition from established Internet data center operators such as AT&T (T - Free Report) and CenturyLink Inc. may affect product pricing, thereby denting Equinix’s margins.
A highly leveraged balance sheet and industry consolidation add to its woes.
Our proven model does not conclusively show that Equinix is likely to beat on 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) to surpass estimates. But that is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Equinix is 0.00%. This is because the Most Accurate estimate of $3.39 per share is in line with the Zacks Consensus Estimate. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Equinix has a Zacks Rank #1. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Freshpet, Inc. (FRPT - Free Report) with an Earnings ESP of +100.0% and a Zacks Rank #3
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Equinix (EQIX): Is a Surprise in the Cards in Q3 Earnings?
Equinix Inc. (EQIX - Free Report) is set to report third-quarter 2016 results on Nov 2. Last quarter, the company posted a positive earnings surprise of 30.7%. Notably, the stock has underperformed the Zacks Consensus Estimate in three out of the trailing four quarters with an average positive surprise of 5.3%.
Let's see how things are shaping up for this announcement.
Factors at Play
Equinix reported better-than-expected second-quarter results. The company’s top and bottom line results also improved on a year-over-year basis. Revenues were mainly driven by strong demand for cloud services among corporations and benefits of the recently acquired Telecity and Bit-isle businesses. Equinix witnessed revenue growth across all three geographic regions and verticals.
Moreover, the upbeat guidance for full-year 2016 was encouraging. Equinix is presently focusing on improving customer experience through the Equinix Customer One program. We are also optimistic on the company’s recurring revenue model and expansion plans announced in March this year
Recently, Equinix and its Gold Managed Service Provider partner, Synoptek announced a joint effort known as Managed Performance Hub. It is the first ever performance hub that establishes a reliable, secure and private connection to the cloud, which enhances performance and delivers a more consistent network experience. The deal will enable Equinix to address the increasing demand for secure network and quality services from enterprises globally.
Also, Equinix recently revealed its plan to expand operations in the capital of Finland, Helsinki. It intends to open Equinix Internet Exchange in the city by the first quarter of fiscal 2017. This will enable the company to meet the fast-growing demand for Internet usage and data storage capacity.
Equinix operates across various geographical regions and is becoming increasingly popular among major players in the tech industry for data management, which should drive its revenues going ahead.
However, intensifying competition from established Internet data center operators such as AT&T (T - Free Report) and CenturyLink Inc. may affect product pricing, thereby denting Equinix’s margins.
A highly leveraged balance sheet and industry consolidation add to its woes.
EQUINIX INC Price and EPS Surprise
EQUINIX INC Price and EPS Surprise | EQUINIX INC Quote
Earnings Whispers
Our proven model does not conclusively show that Equinix is likely to beat on 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) to surpass estimates. But that is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Equinix is 0.00%. This is because the Most Accurate estimate of $3.39 per share is in line with the Zacks Consensus Estimate. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Equinix has a Zacks Rank #1. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Carmike Cinemas Inc. with Earnings ESP of +166.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here
Freshpet, Inc. (FRPT - Free Report) with an Earnings ESP of +100.0% and a Zacks Rank #3
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>