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SecureWorks (SCWX) to Report Q3 Earnings: What's in Store?

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SecureWorks Corporation (SCWX - Free Report) is slated to release third-quarter fiscal 2021 results on Dec 3.

The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $137.5 million, indicating a 2.7% year-over-year decline. The consensus mark for earnings is pinned at 5 cents, suggesting a five-fold jump from the year-ago quarter’s earnings of a penny per share.

The company estimates quarterly revenues in the $137-$139 million band. Further, it expects non-GAAP earnings per share between 4 cents and 6 cents.

In the last reported quarter, the company reported non-GAAP earnings per share of 10 cents, against a loss of 1 cent per share in the year-ago quarter. Further, revenues increased 1.4% year on year to $138.5 million.

Let’s see how things have shaped up for this announcement.

Factors at Play

SecureWorks’ quarterly results are expected to reflect benefits from the continued solid demand for its products, given the healthy environment of the global security market.

Also, a huge global workforce is working remotely, in an effort to contain the spread of coronavirus. However, an increasing number of people logging into employers' networks has been triggering a greater need for security. This might have had spurred demand for SecureWorks’ products in the fiscal third quarter.

Moreover, strong adoption of the company’s cloud-native platform and higher demand for its deep security expertise are likely to have driven customer acquisition in the quarter under review.

Further, growing traction of SecureWorks’ Red Cloak Threat Detection and Response (TDR) globally is expected to have expanded the company’s international footprint. Notably, in the last reported quarter, the company hosted more than 200 customers on its Red Cloak TDR platform.

Earlier, in September, the company acquired Delve Laboratories, which delivers cloud-based SaaS solutions powered by artificial intelligence (AI) and machine learning. The acquisition is anticipated to have extended the company’s product portfolio and boosted its presence in Canada.

Additionally, the company partnered with Arrow Electronics (ARW - Free Report) under its Global Partner Program, to accelerate the deployment of its security solutions across North America. This is expected to have driven the expansion of SecureWorks’ solid partner base, which includes VMware’s Carbon Black and Qualys.

Moreover, a revenue shift from custom consulting and staffing type Managed Security Services (MSS) work to software-driven TDR solutions along with a reduction in travel expenses is expected to have driven gross margin expansion in the to-be-reported quarter.

What Our Model Says

Our proven model does not predict an earnings beat for SecureWorks this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

At present, SecureWorks has a Zacks Rank of 3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Construction Partners (ROAD - Free Report) has an Earnings ESP of +16.02% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

Signet Jewelers Limited (SIG - Free Report) has an Earnings ESP of +13.95% and a Zacks Rank of 2.

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