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Is Roku (ROKU) Set to Beat Q1 Earnings Estimates Today?

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Shares of Roku (ROKU - Free Report) dipped marginally on Tuesday in a sign that investors might be a bit nervous about the streaming TV company’s first quarter earnings report. Let’s take a quick look to see if they should be.

Roku has seen its stock price plummet nearly 23% over the last 12 weeks as investors assess just how much the streaming TV platform, which allows users to access their Netflix (NFLX - Free Report) , Hulu, ESPN+ (DIS - Free Report) , and many other streaming accounts, can really grow. With that said, the relatively new public company could easily impress investors by posting strong first quarter financial results today.

Roku’s Q1 Outlook

Roku’s first quarter revenues are projected to reach $128.41 million. Investors should note that Roku reported fourth quarter revenue of $188.3 million, which marked a 28% climb from the year-ago period. The expected sequential downturn is due, for the most part, to strong holiday period sales.

Moving on, Roku—like many other young tech companies trying to expand—is projected to report an adjusted loss of $0.16 per share in the first quarter. On its face, this earnings estimate doesn’t tell investors enough.

They will also want to understand if Roku is expected to beat or miss our current earnings estimate, as this can determine how a stock performs in the near-term. Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, either way.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

In contrast, a stock with a Zacks Rank #3 (Hold) or worse, coupled with a negative Earnings ESP, is one that we typically want to avoid during earnings season.

Roku’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for a loss of $0.14 per share, which comes in 2 cents better than our current consensus estimate. The company is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 14.56%.

Therefore, investors should consider Roku a stock that could top quarterly earnings estimates when it reports its Q1 results after the closing bell.

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