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Yahoo! (YHOO) to Report Q1 Earnings: What's in the Cards?
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Yahoo! Inc. is set to report first-quarter 2017 results on Apr 18 after the bell.
Despite beating estimates in three of the last four quarters, it recorded an average negative earnings surprise of 37.86%.
However, as far as share price movement is concerned, year to date, the stock has appreciated 28.4% compared with the Zacks Internet - Services industry’s gain of 3.8%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Yahoo reported better-than-expected fourth quarter results surpassing the Zacks Consensus Estimate on both counts. The results were driven by continuous strong performance in mobile and native businesses.
Two consecutive quarters of earnings beat showed signs of a business revamp, which came at a good time as Yahoo is on the verge of selling its core assets to Verizon (VZ - Free Report) .
However, Yahoo was forced to make a billion dollar discount in the purchase agreement in the wake of the data breach disclosures. Verizon will now buy Yahoo’s core Internet business at a discount of $350 million for $4.48 billion. The revised deal comes after Yahoo made public two major data breaches after the original $4.8 billion deal was announced in Jul 2016.
The newly negotiated deal will make Altaba, Yahoo’s new name post acquisition, responsible for all costs stemming from shareholder lawsuits and a regulatory inquiry by the Securities and Exchange Commission. However, Verizon and Altaba will split costs from all other hack-related lawsuits and government investigations.
Verizon will receive Yahoo’s owned and operated assets (search engine, communications platforms and digital content), advertising products (Flurry, Brightroll and Gemini), social assets (Tumblr, Flickr, and Polyvore) and remaining real estate. Yahoo will retain its stake in Alibaba Group Holding Limited and Yahoo Japan Corp., minority investments, Excalibur patent portfolio, and cash and convertibles.
The deal is expected to close in the second quarter of 2017 until which Yahoo will continue to operate independently.
Our proven model does not conclusively show that Yahoo 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 8 cents. Therefore, the Earnings ESP for the stock is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Yahoo carries a Zacks Rank #3, which when combined with an 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.
Stocks That Warrant a Look
Here are a couple of stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:
KLA-Tencor Corporation (KLAC - Free Report) , with an Earnings ESP of +2.60% and a Zacks Rank #2.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>.
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Yahoo! (YHOO) to Report Q1 Earnings: What's in the Cards?
Yahoo! Inc. is set to report first-quarter 2017 results on Apr 18 after the bell.
Despite beating estimates in three of the last four quarters, it recorded an average negative earnings surprise of 37.86%.
However, as far as share price movement is concerned, year to date, the stock has appreciated 28.4% compared with the Zacks Internet - Services industry’s gain of 3.8%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Yahoo reported better-than-expected fourth quarter results surpassing the Zacks Consensus Estimate on both counts. The results were driven by continuous strong performance in mobile and native businesses.
Two consecutive quarters of earnings beat showed signs of a business revamp, which came at a good time as Yahoo is on the verge of selling its core assets to Verizon (VZ - Free Report) .
However, Yahoo was forced to make a billion dollar discount in the purchase agreement in the wake of the data breach disclosures. Verizon will now buy Yahoo’s core Internet business at a discount of $350 million for $4.48 billion. The revised deal comes after Yahoo made public two major data breaches after the original $4.8 billion deal was announced in Jul 2016.
The newly negotiated deal will make Altaba, Yahoo’s new name post acquisition, responsible for all costs stemming from shareholder lawsuits and a regulatory inquiry by the Securities and Exchange Commission. However, Verizon and Altaba will split costs from all other hack-related lawsuits and government investigations.
Verizon will receive Yahoo’s owned and operated assets (search engine, communications platforms and digital content), advertising products (Flurry, Brightroll and Gemini), social assets (Tumblr, Flickr, and Polyvore) and remaining real estate. Yahoo will retain its stake in Alibaba Group Holding Limited and Yahoo Japan Corp., minority investments, Excalibur patent portfolio, and cash and convertibles.
The deal is expected to close in the second quarter of 2017 until which Yahoo will continue to operate independently.
Yahoo! Inc. Price, Consensus and EPS Surprise
Yahoo! Inc. Price, Consensus and EPS Surprise | Yahoo! Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Yahoo 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 8 cents. Therefore, the Earnings ESP for the stock is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Yahoo carries a Zacks Rank #3, which when combined with an 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.
Stocks That Warrant a Look
Here are a couple of stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:
Applied Materials, Inc. (AMAT - Free Report) , with an Earnings ESP of +1.32% and Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KLA-Tencor Corporation (KLAC - Free Report) , with an Earnings ESP of +2.60% and a Zacks Rank #2.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>.