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Technology Stocks' Q4 Earnings on Feb 27: WDAY, RP & SSTK
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We are now at the tail end of the fourth-quarter earnings season with 411 S&P 500 members, representing 82.2% of the index’s total market capitalization, having already reported their results.
As of Feb 17, total earnings of these companies were up 8% on a year-over-year basis (68.9% of the companies beat earnings estimates) while total revenue was up 4.9% on a year-over-year basis (54.7% of the companies beat top-line estimates).
Notably, earnings and revenue numbers are better than the recent quarters and growth looks poised to reach its highest level in the last two years. Also, total earnings are poised to reach a new quarterly record. However, positive earnings surprises are tracking low at this stage compared to the past.
As per our latest Earnings Preview report, overall fourth-quarter earnings for S&P 500 companies are anticipated to be up 7.4% from the year-ago quarter on revenues that are estimated to increase 3.9%.
For the technology sector in particular, 94.1% of the sector’s total market cap has already reported results with 74.1% beating estimates on the bottom line and 74.1% posting revenue beats.
Here we take a look at three technology companies that are set to report their fourth-quarter 2016 earnings on Feb 27:
Workday, Inc. (WDAY - Free Report) is unlikely to beat estimates as it has an unfavorable combination of a Zacks Rank #3 (Hold) and an Earnings ESP of -2.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1(Strong Buy), 2 (Buy) or 3 to beat earnings.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
During the fourth quarter, the company witnessed growing adoptions for its Workday Financial Management and Workday Human Capital Management (HCM) solutions. Notable companies like Wal-Mart (WMT - Free Report) and Amazon selected Workday HCMand other products. This improving adoption rate is a big positive for the company, which will boost its results going ahead.
Moreover, the acquisition of NetSuite by Oracle has acted in favor of Workday as many customers have started to pull back from committing to NetSuite due to uncertainty.
However, currency risks due to a substantial exposure to international revenues remain a concern for the company.
We note that Workday’s results compared favorably with the Zacks Consensus Estimate in three of the last four quarters, resulting in an average positive surprise of 2.72%.
Shares of Workday have outperformed the Zacks Internet - Software industry over the last one year. While the industry gained 18.2%, the stock returned 53.1%.
Similarly, RealPage Inc. looks unlikely to beat earnings estimates as it has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.
We note that the company’s recent acquisition of Axiometrics, a data provider in the apartment market sector, will help RealPage to provide enhanced services to its users. This will increase product adoptions in the space in the long run.
However, pricing pressure due to an intensifying competitive landscape remains a concern for the company in the fourth quarter.
Notably, RealPage’s results have beaten the Zacks Consensus Estimate in three out of the preceding four quarters with an average positive surprise of 19.64%.
Also, shares of RealPage have outperformed the Zacks Business - Software Services industry over the last one year. While the industry gained 5.7%, the stock gained a decent 70.7%.
Shutterstock is a global marketplace for digital imagery.
The company is gradually shifting its focus on enterprise offerings given the good demand in the segment. As of the third-quarter, the segment comprised approximately 30% of its total revenue. Also, the company’s Music and Video offerings are gaining traction, which remains a positive for the fourth-quarter earnings release.
We also note that the Google partnership (announced in Jul 2016) to integrate Shutterstock images to the search giant’s ad platform is still in its nascent stages and remains a big positive for the company.
However, a competitive landscape remains a concern for company in the soon-to-be reported quarter.
Notably, Shutterstock’s results have beaten the Zacks Consensus Estimate in each of the preceding four quarters resulting in an average positive surprise of 43.84%.
Shares of Shutterstock have outperformed the Zacks Computer Software-Services industry over the last one year. While the industry gained 20.9%, the stock appreciated 49.9%.
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Technology Stocks' Q4 Earnings on Feb 27: WDAY, RP & SSTK
We are now at the tail end of the fourth-quarter earnings season with 411 S&P 500 members, representing 82.2% of the index’s total market capitalization, having already reported their results.
As of Feb 17, total earnings of these companies were up 8% on a year-over-year basis (68.9% of the companies beat earnings estimates) while total revenue was up 4.9% on a year-over-year basis (54.7% of the companies beat top-line estimates).
Notably, earnings and revenue numbers are better than the recent quarters and growth looks poised to reach its highest level in the last two years. Also, total earnings are poised to reach a new quarterly record. However, positive earnings surprises are tracking low at this stage compared to the past.
As per our latest Earnings Preview report, overall fourth-quarter earnings for S&P 500 companies are anticipated to be up 7.4% from the year-ago quarter on revenues that are estimated to increase 3.9%.
For the technology sector in particular, 94.1% of the sector’s total market cap has already reported results with 74.1% beating estimates on the bottom line and 74.1% posting revenue beats.
Here we take a look at three technology companies that are set to report their fourth-quarter 2016 earnings on Feb 27:
Workday, Inc. Price and EPS Surprise
Workday, Inc. Price and EPS Surprise | Workday, Inc. Quote
Workday, Inc. (WDAY - Free Report) is unlikely to beat estimates as it has an unfavorable combination of a Zacks Rank #3 (Hold) and an Earnings ESP of -2.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1(Strong Buy), 2 (Buy) or 3 to beat earnings.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
During the fourth quarter, the company witnessed growing adoptions for its Workday Financial Management and Workday Human Capital Management (HCM) solutions. Notable companies like Wal-Mart (WMT - Free Report) and Amazon selected Workday HCMand other products. This improving adoption rate is a big positive for the company, which will boost its results going ahead.
Moreover, the acquisition of NetSuite by Oracle has acted in favor of Workday as many customers have started to pull back from committing to NetSuite due to uncertainty.
However, currency risks due to a substantial exposure to international revenues remain a concern for the company.
We note that Workday’s results compared favorably with the Zacks Consensus Estimate in three of the last four quarters, resulting in an average positive surprise of 2.72%.
Shares of Workday have outperformed the Zacks Internet - Software industry over the last one year. While the industry gained 18.2%, the stock returned 53.1%.
RealPage, Inc. Price and EPS Surprise
RealPage, Inc. Price and EPS Surprise | RealPage, Inc. Quote
Similarly, RealPage Inc. looks unlikely to beat earnings estimates as it has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.
RealPage provides on-demand property management solutions.
We note that the company’s recent acquisition of Axiometrics, a data provider in the apartment market sector, will help RealPage to provide enhanced services to its users. This will increase product adoptions in the space in the long run.
However, pricing pressure due to an intensifying competitive landscape remains a concern for the company in the fourth quarter.
Notably, RealPage’s results have beaten the Zacks Consensus Estimate in three out of the preceding four quarters with an average positive surprise of 19.64%.
Also, shares of RealPage have outperformed the Zacks Business - Software Services industry over the last one year. While the industry gained 5.7%, the stock gained a decent 70.7%.
Shutterstock, Inc. Price and EPS Surprise
Shutterstock, Inc. Price and EPS Surprise | Shutterstock, Inc. Quote
Shutterstock, Inc. (SSTK - Free Report) too is unlikely to beat estimates as it has an unfavorable combination of an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shutterstock is a global marketplace for digital imagery.
The company is gradually shifting its focus on enterprise offerings given the good demand in the segment. As of the third-quarter, the segment comprised approximately 30% of its total revenue. Also, the company’s Music and Video offerings are gaining traction, which remains a positive for the fourth-quarter earnings release.
We also note that the Google partnership (announced in Jul 2016) to integrate Shutterstock images to the search giant’s ad platform is still in its nascent stages and remains a big positive for the company.
However, a competitive landscape remains a concern for company in the soon-to-be reported quarter.
Notably, Shutterstock’s results have beaten the Zacks Consensus Estimate in each of the preceding four quarters resulting in an average positive surprise of 43.84%.
Shares of Shutterstock have outperformed the Zacks Computer Software-Services industry over the last one year. While the industry gained 20.9%, the stock appreciated 49.9%.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>