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What's in the Cards for Splunk (SPLK) in Q4 Earnings?
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Splunk Inc. is scheduled to release fourth-quarter fiscal 2017 results on Feb 23. Splunk posted a negative surprise of 17.54% in the last quarter. The company has also posted an average negative surprise of 11.97% over the trailing four quarters. Let’s see how things are shaping up for the upcoming announcement.
Factors to Consider
Splunk has been strengthening its product pipeline to benefit from the growing data and analytics market. Over the past few years, the cloud and data analytics market has seen strong growth especially in the enterprise domain, which is a positive for the company. Also, the company has been seeing an increase in the numbers of customers.
However, due to the ongoing transition, the license bookings businesshas started to slow down. Also, increasing investments in research and development coupled with higher operating costs are anticipated to be a drag on profitability. As Splunk continues to explore and expand into new markets, sales and marketing expenditures are also predicted to rise significantly, thereby hurting margins.
Also, growing competition from established players such as International Business Machines (IBM - Free Report) , SAP, Amazon and Microsoft (MSFT - Free Report) , all of which are vying to get a bigger share of the market, is a concern.
For the fourth quarter, Splunk expects revenues in a range of $286 million to $288 million and non-GAAP operating margin in a range of 8% to 9%.
Our proven model does not conclusively show that Splunk 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below
Zacks ESP: Splunk’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Splunk carries a Zacks Rank #3. 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) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
Here’s a stock that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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What's in the Cards for Splunk (SPLK) in Q4 Earnings?
Splunk Inc. is scheduled to release fourth-quarter fiscal 2017 results on Feb 23. Splunk posted a negative surprise of 17.54% in the last quarter. The company has also posted an average negative surprise of 11.97% over the trailing four quarters. Let’s see how things are shaping up for the upcoming announcement.
Factors to Consider
Splunk has been strengthening its product pipeline to benefit from the growing data and analytics market. Over the past few years, the cloud and data analytics market has seen strong growth especially in the enterprise domain, which is a positive for the company. Also, the company has been seeing an increase in the numbers of customers.
However, due to the ongoing transition, the license bookings businesshas started to slow down. Also, increasing investments in research and development coupled with higher operating costs are anticipated to be a drag on profitability. As Splunk continues to explore and expand into new markets, sales and marketing expenditures are also predicted to rise significantly, thereby hurting margins.
Also, growing competition from established players such as International Business Machines (IBM - Free Report) , SAP, Amazon and Microsoft (MSFT - Free Report) , all of which are vying to get a bigger share of the market, is a concern.
For the fourth quarter, Splunk expects revenues in a range of $286 million to $288 million and non-GAAP operating margin in a range of 8% to 9%.
Splunk Inc. Price and EPS Surprise
Splunk Inc. Price and EPS Surprise | Splunk Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Splunk 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below
Zacks ESP: Splunk’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Splunk carries a Zacks Rank #3. 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) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
Here’s a stock that you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter
The Priceline Group Inc. with an Earnings ESP of +0.46% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>