Glu Mobile, Inc. , a developer of gaming applications for smartphones and tablets, is set to release fourth-quarter 2016 results on Feb 8.
Let’s see how things are shaping up for this announcement.
Factors to Consider
The company’s roster of celebrity games is one of its biggest positives. Its super successful game Kim Kardashian: Hollywood continues to be a big contributor to revenues (albeit slowing down). In the last reported quarter, the top line also benefited from the launch of Tap Sports Baseball 2016 as well as Racing Rivals and Cooking Dash 2016.
Glu said that the company is working on turning its 85 games (released over the past six years) into “evergreen revenue generators” by adding new gameplay modes, community-enhancing features etc, which is likely to help it to grow bookings by the first half of 2017. In 2016, it released Nicki Minaj: Empire and plans to release another 4-6 evergreen titles next year. The company brought on board, a video game industry veteran Nick Earl as the new CEO while Niccolo de Masiwill now be the chairman of the company.
It also acquired a majority stake in CrowdStar, which develops free-to-play mobile games. Analysts observe that free-to-play games are a “lucrative development” in the gaming space. With the acquisition of Crowdstar, Glu is well positioned to benefit in this rapidly growing market. It also acquired another game developer, Plain Vanilla in Dec 2016.
However, growing competition from established players like Electronic Arts and Activision Blizzard might make it difficult for the company to register strong growth in the near term. Further, significant investment in research and development of new games will likely be a headwind for the company and put pressure on margins.
For the fourth quarter, Glu Mobile expects bookings in a range of $46 million to $48 million and adjusted gross margin of 64.6%.
Earnings Whispers?
Our proven model does not conclusively show that Glu Mobile is likely to beat 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: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 10 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glu Mobile carries a Rank #3, which increases the predictive power of ESP. However we need to have a positive ESP to be confident of an earnings beat.
We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Twilio Inc. (TWLO - Free Report) with 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.
Pandora Media, Inc. with an Earnings ESP of +10.81% and a Zacks Rank #3.
CenturyLink, Inc. with an Earnings ESP of +1.79% and a Zacks Rank #3.
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Zacks Names "Single Best Pick to Double"
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Glu Mobile, Inc. , a developer of gaming applications for smartphones and tablets, is set to release fourth-quarter 2016 results on Feb 8.
Let’s see how things are shaping up for this announcement.
Factors to Consider
The company’s roster of celebrity games is one of its biggest positives. Its super successful game Kim Kardashian: Hollywood continues to be a big contributor to revenues (albeit slowing down). In the last reported quarter, the top line also benefited from the launch of Tap Sports Baseball 2016 as well as Racing Rivals and Cooking Dash 2016.
Glu said that the company is working on turning its 85 games (released over the past six years) into “evergreen revenue generators” by adding new gameplay modes, community-enhancing features etc, which is likely to help it to grow bookings by the first half of 2017. In 2016, it released Nicki Minaj: Empire and plans to release another 4-6 evergreen titles next year. The company brought on board, a video game industry veteran Nick Earl as the new CEO while Niccolo de Masiwill now be the chairman of the company.
It also acquired a majority stake in CrowdStar, which develops free-to-play mobile games. Analysts observe that free-to-play games are a “lucrative development” in the gaming space. With the acquisition of Crowdstar, Glu is well positioned to benefit in this rapidly growing market. It also acquired another game developer, Plain Vanilla in Dec 2016.
However, growing competition from established players like Electronic Arts and Activision Blizzard might make it difficult for the company to register strong growth in the near term. Further, significant investment in research and development of new games will likely be a headwind for the company and put pressure on margins.
For the fourth quarter, Glu Mobile expects bookings in a range of $46 million to $48 million and adjusted gross margin of 64.6%.
Earnings Whispers?
Our proven model does not conclusively show that Glu Mobile is likely to beat 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: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 10 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glu Mobile carries a Rank #3, which increases the predictive power of ESP. However we need to have a positive ESP to be confident of an earnings beat.
We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Twilio Inc. (TWLO - Free Report) with 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.
Pandora Media, Inc. with an Earnings ESP of +10.81% and a Zacks Rank #3.
CenturyLink, Inc. with an Earnings ESP of +1.79% and a Zacks Rank #3.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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