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Software Stock Earnings Due on May 9: ACIW, SYMC, CISN, CVET

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The latest Earnings Preview shows that total reported earnings of the Tech companies as of May 1 are down 6.8% from the same period last year on 4% higher revenues with 78.9% participants beating on EPS and 60.5% on revenues.

Further, the report suggests that the Tech companies will witness a 7.3% year-over-year decline in first-quarter earnings on 2.9% revenue growth.

Sluggish performance of semiconductors is a major drag on the technology sector. However, a rapid uptick in software stocks is a breather.

What’s Driving Software Stocks?

Software stocks are benefiting from a strong digital transformation environment. The breakthroughs in cloud computing, predictive analysis, AI, self-driving vehicles, digital personal assistants, IoT coupled with a steep enterprise spending bode well for software stocks.

Moreover, the ongoing adoption of cloud is a key catalyst. Higher percentage of recurring revenues is also boosting top-line growth for Software-as-a-Service (SaaS) companies.

Further, the increasing need for cloud platform safety amid the growing incidents of cyber-attacks and hacking is driving demand for cyber security software. Additionally, sturdy demand for application and infrastructure performance monitoring tools is likely to fuel growth for software stocks.

Notably, Gartner estimates global IT expenditure to inch up 3.2% in 2019 to $3.8 trillion on account of enterprise software, cloud and digital orientation efforts. Enterprise software spending, which is likely to record highest growth of 8.3% in 2019, is being driven by SaaS, adds Gartner.

However, this does not ensure an earnings beat for all companies in the space. Notably, a company’s earnings outperformance is dependent on the overall business environment as well as its management’s ability to implement the operating and strategic plans.

In other words, a company may perform dismally despite a favorable business landscape if it fails to capitalize on the opportunities due to lack of execution.

Let’s see, how the following software stocks are placed ahead of their quarterly earnings release on May 9.

ACI Worldwide, Inc. (ACIW - Free Report) is scheduled to report first-quarter 2019 results. Per the company’s surprise record, its earnings surpassed the Zacks Consensus Estimate only once in the trailing four quarters but delivered an average beat of 169.11%.

The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at a loss of 15 cents, indicating an improvement from the year-ago reported loss of 17 cents per share. The consensus estimate for the same-period revenues stands at $212.1 million, implying a 1.3% climb from the prior-year reported number. The stock sports a Zacks Rank #1 (Strong Buy).

Symantec Corporation is scheduled to report fourth-quarter fiscal 2019 results. The company’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average being 14.53%. The stock carries a Zacks Rank #3 (Hold).

The Zacks Consensus Estimate for revenues stands at $1.21 billion, suggesting a decline of 1.14% from the year-ago reported figure. The consensus estimate for earnings is pegged at 39 cents, indicating a 15.22% drop from the year-ago reported figure. (Read more: Symantec to Report Q4 Earnings: What's in Store?)

Capitol Acquisition Corp. is scheduled to report first-quarter 2019 results. The Zacks Consensus Estimate for earnings is pegged at 19 cents per share while the same for revenues stands at $188.5 million. Compared with the year-earlier registered figures, the estimates hint at a flat earnings and 5.2% ascent in revenues. The stock carries a Zacks Rank of 3.

Notably, Capitol’s earnings exceeded the Zacks Consensus Estimate in three of the previous four quarters, the average positive surprise being 0.98%.

Covetrus Inc. is scheduled to report first-quarter 2019 results. The Zacks Consensus Estimate for earnings is pegged at 17 cents per share while the same for revenues stands at $995.7 Million. The stock is a Zacks #3 Ranked player.

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