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Factors to Look for Ahead of Synopsys' (SNPS) Q4 Earnings
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Synopsys Inc. (SNPS - Free Report) is set to release fourth-quarter fiscal 2017 results on Nov 29. The company has a decent earnings surprise history having beaten the Zacks Consensus Estimate twice while matching the same on two occasions in the trailing four quarters. It has an average positive earnings surprise of 5.7%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
The company’s sustained focus on introducing new products is expected to continue boosting revenues. Moreover, its unique intellectual properties and global support are likely to drive forthcoming results.
Also, Synopsys’ time-based license revenue model under which customers effectively rent the software rather than paying a one-time upfront license fee is impressive. Notably, this is a much more predictable revenue model, providing better visibility through a steady and recurring revenue stream.
Additionally, acquisitions are central to the company’s growth strategy and are helping it to gain access to newer markets and technologies as well as diversify and broaden product portfolio. In fact, the company’s continued acquisitions are expected to make a good contribution to its revenue stream.
In September, Synopsys had completed the acquisition of QuantumWise. This buyout has not only enhanced the company’s capabilities but has also gained it QuantumWise’s customers. Therefore, we expect the acquisition to boost the company’s fourth-quarter revenues.
However, a challenging technology spending environment, uncertainty regarding the exact time of realizing acquisition synergies, and competition from Cadence Design Systems Inc. (CDNS - Free Report) and Mentor Graphics Corp., remain near-term headwinds.
Our proven model does not conclusively show that Synopsys 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) — for this to happen. That is not the case here, as you will see below.
Zacks ESP: Synopsys’ has an Earnings ESP of -1.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Synopsys carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Pure Storage, Inc. (PSTG - Free Report) has an Earnings ESP of +18.52% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Factors to Look for Ahead of Synopsys' (SNPS) Q4 Earnings
Synopsys Inc. (SNPS - Free Report) is set to release fourth-quarter fiscal 2017 results on Nov 29. The company has a decent earnings surprise history having beaten the Zacks Consensus Estimate twice while matching the same on two occasions in the trailing four quarters. It has an average positive earnings surprise of 5.7%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
The company’s sustained focus on introducing new products is expected to continue boosting revenues. Moreover, its unique intellectual properties and global support are likely to drive forthcoming results.
Also, Synopsys’ time-based license revenue model under which customers effectively rent the software rather than paying a one-time upfront license fee is impressive. Notably, this is a much more predictable revenue model, providing better visibility through a steady and recurring revenue stream.
Additionally, acquisitions are central to the company’s growth strategy and are helping it to gain access to newer markets and technologies as well as diversify and broaden product portfolio. In fact, the company’s continued acquisitions are expected to make a good contribution to its revenue stream.
In September, Synopsys had completed the acquisition of QuantumWise. This buyout has not only enhanced the company’s capabilities but has also gained it QuantumWise’s customers. Therefore, we expect the acquisition to boost the company’s fourth-quarter revenues.
However, a challenging technology spending environment, uncertainty regarding the exact time of realizing acquisition synergies, and competition from Cadence Design Systems Inc. (CDNS - Free Report) and Mentor Graphics Corp., remain near-term headwinds.
Synopsys, Inc. Price and EPS Surprise
Synopsys, Inc. Price and EPS Surprise | Synopsys, Inc. Quote
Earnings Whispers
Our proven model does not conclusively show that Synopsys 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) — for this to happen. That is not the case here, as you will see below.
Zacks ESP: Synopsys’ has an Earnings ESP of -1.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Synopsys carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Marvell Technology Group Ltd. (MRVL - Free Report) has an Earnings ESP of +0.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pure Storage, Inc. (PSTG - Free Report) has an Earnings ESP of +18.52% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>