We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Chegg (CHGG) Spring a Surprise this Earnings Season?
Read MoreHide Full Article
Santa Clara, CA-based Chegg, Inc. (CHGG - Free Report) is set to report first-quarter 2017 results on May 1, after market close.
Last quarter, the company posted a positive earnings surprise of 100%. Notably, Chegg surpassed estimates in three of the last four quarters, with an average positive surprise of 33.66%.
Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
The company’s transformation to an all-digital business is expected to substantially boost Chegg Service revenues. With this plan in place, Chegg will not have to invest in physical textbooks, which will likely drive free cash flow and gross margin. The company projected Chegg Service revenues in the band of $38 million to $44 million, higher than $25.6 million reported in the year-ago quarter.
Also, the increasing popularity of online, on-demand human help for different courses at college and high school levels drove profits for Chegg Tutors (which provides live tutorials to students) in the recent past. This is also expected to contribute to the top line in the soon-to-be-reported quarter.
However, total revenue is expected to decrease compared to the year ago level. Total revenue is projected in the $57–$59 million band, lower than $66.7 million in the prior-year quarter.
Chegg recently entered into a strategic partnership with The National Research Center for College & University Admissions in order to improve the college selection process and boost enrollments. Owing to this, the company anticipates a restructuring charge of approximately $1.0 million, the majority of which will be incurred in the first quarter of 2017.
Notably, for the first quarter, the Zacks Consensus Estimate for earnings is pegged at a loss of 6 cents, reflecting a 60% improvement. Meanwhile, our estimate for revenues is pegged at $58.35 million, implying a 12.5% deterioration.
Earnings Whispers
Our proven model does not conclusively show a beat for Chegg 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: The Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chegg has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Note that 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 revision.
Stocks to Consider
Here are some companies in the broader computer and technology sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Blackbaud, Inc. (BLKB - Free Report) , with an Earnings ESP of +5.88% and a Zacks Rank #3, will report earnings on May 1.
DragonWave Inc , with an Earnings ESP of +8.82% and a Zacks Rank #2, is expected to release quarterly results on Mar 17.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Can Chegg (CHGG) Spring a Surprise this Earnings Season?
Santa Clara, CA-based Chegg, Inc. (CHGG - Free Report) is set to report first-quarter 2017 results on May 1, after market close.
Last quarter, the company posted a positive earnings surprise of 100%. Notably, Chegg surpassed estimates in three of the last four quarters, with an average positive surprise of 33.66%.
Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
The company’s transformation to an all-digital business is expected to substantially boost Chegg Service revenues. With this plan in place, Chegg will not have to invest in physical textbooks, which will likely drive free cash flow and gross margin. The company projected Chegg Service revenues in the band of $38 million to $44 million, higher than $25.6 million reported in the year-ago quarter.
Also, the increasing popularity of online, on-demand human help for different courses at college and high school levels drove profits for Chegg Tutors (which provides live tutorials to students) in the recent past. This is also expected to contribute to the top line in the soon-to-be-reported quarter.
However, total revenue is expected to decrease compared to the year ago level. Total revenue is projected in the $57–$59 million band, lower than $66.7 million in the prior-year quarter.
Chegg recently entered into a strategic partnership with The National Research Center for College & University Admissions in order to improve the college selection process and boost enrollments. Owing to this, the company anticipates a restructuring charge of approximately $1.0 million, the majority of which will be incurred in the first quarter of 2017.
Notably, for the first quarter, the Zacks Consensus Estimate for earnings is pegged at a loss of 6 cents, reflecting a 60% improvement. Meanwhile, our estimate for revenues is pegged at $58.35 million, implying a 12.5% deterioration.
Earnings Whispers
Our proven model does not conclusively show a beat for Chegg 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: The Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Chegg, Inc. Price and EPS Surprise
Chegg, Inc. Price and EPS Surprise | Chegg, Inc. Quote
Zacks Rank: Chegg has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Note that 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 revision.
Stocks to Consider
Here are some companies in the broader computer and technology sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Blackbaud, Inc. (BLKB - Free Report) , with an Earnings ESP of +5.88% and a Zacks Rank #3, will report earnings on May 1.
Apptio Inc. is expected to release earnings on May 4. It has an Earnings ESP of +8.33% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
DragonWave Inc , with an Earnings ESP of +8.82% and a Zacks Rank #2, is expected to release quarterly results on Mar 17.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>