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Can Yahoo (YHOO) Surprise This Earnings Season?
Yahoo! Inc. ( YHOO - Analyst Report) is set to report first-quarter 2014 results on Apr 15. Last quarter, it posted a 30.0% positive surprise. Let’s see how things are shaping up for this announcement. Growth Factors this Past Quarter
Yahoo’s fourth-quarter earnings exceeded the Zacks Consensus Estimate by 10 cents driven by its equity holdings in Yahoo Japan assets and a lower tax rate. Also, GAAP revenues of $1.27 billion were up sequentially as well as year over year.
Margins expanded both sequentially as well as from the year-ago quarter due to solid expense management and a favorable mix.
For the first quarter, Yahoo expects revenues within $1.12–$1.16 billion, adjusted EBITDA in the $290–$330 million range and non-GAAP operating income in the range of $130–$170 million. Earnings Whispers?
Our proven model does not conclusively show that Yahoo will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below. Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 29 cents. Hence, the difference is 0.00%. Zacks Rank: Yahoo has a Zacks Rank #3 (Hold) which when combined with a 0.00% 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
You could consider other stocks with a positive Earnings ESP and a Zacks Rank #1, 2 or 3 such as: E-Commerce China Dangdang Inc. , with Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy). ON Semiconductor Corp. , with Earnings ESP of +6.67% and a Zacks Rank #1. Yelp, Inc. ( YELP - Snapshot Report) , with Earnings ESP of +33.33% and a Zacks Rank #2 (Buy). Read the Full Research Report on YHOO Read the Full Research Report on ONNN Read the Full Research Report on YELP Read the Full Research Report on DANG Zacks Investment Research