Google Inc. is set to report first quarter 2013 results on Apr 18. Last quarter, it posted a 4.76% positive surprise. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Google’s gross revenue in the fourth quarter of 2012 was up both sequentially and year over year. Additionally, the company’s strong position in the mobile segment enabled Google to generate strong mobile revenue growth.
The company’s focus on protecting its position in search has ensured that it remains the dominant player across desktop and mobile platforms. Recently, Google showed interest in the fast-growing e-commerce market by launching various innovative services to better compete with Amazon.com.
The company’s success in the tablet market and diversification of its business into a fast-growing e-commerce segment is quite encouraging. We believe Google’s growth strategies and solid execution will help the company to continue on the growth path.
Our proven model does not conclusively show that Google will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as you will see below.
Negative Zacks ESP: The Most Accurate estimate stands at $8.65 while the Zacks Consensus Estimate is higher at $8.79. That is a difference of -1.59%.
Zacks Rank #2 (Buy): Google’s Zacks Rank #2 (Buy) when combined with a negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other 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:
Sandisk Corp. (SNDK - Analyst Report), with an ESP of +9.09% and a Zacks Rank #1 (Strong Buy)
Netflix Inc. (NFLX - Analyst Report), Earnings ESP of +5.56% and Zacks Rank #2 (Buy)
Amazon.com (AMZN - Analyst Report), Earnings ESP of +190.0% and Zacks Rank #3 (Hold)