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What's in Store for F5 Networks (FFIV) This Earnings Season?

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F5 Networks (FFIV - Free Report) is set to report second-quarter fiscal 2021 results on Apr 27.

For the fiscal second quarter, F5 Networks estimates revenues of $625-$645 million (mid-point $635 million). The Zacks Consensus Estimate for revenues is pegged at $634.8 million, suggesting year-over-year growth of 8.8%.

The company anticipates non-GAAP earnings of $2.32-$2.44 per share (mid-point $2.38). The Zacks Consensus Estimate is pinned at $2.39 per share, indicating a year-over-year increase of 7.2%.

The company’s earnings surpassed estimates in all of the trailing four quarters, the average beat being 6%.

Let’s see how things have shaped up prior to the upcoming announcement.

Factors at Play

F5 Networks’ fiscal second-quarter performance is likely to have benefited from its focus on transitioning the business to a software-driven model. Increasing demand for multi-cloud application services is expected to have been a key growth driver.

The COVID-19 pandemic-induced work-from-home and online-learning wave is significantly spurring demand for secured communication networks. We anticipate this new trend to have aided F5 Networks’ quarterly performance.

Rising traction of the Enterprise License Agreement (ELA) and annual subscriptions by customers is likely to have boosted software growth. This, in turn, is anticipated to have fueled product revenue growth. The Zacks Consensus Estimate for product revenues is pinned at $302 million, calling for more than 16% improvement from the year-ago reported figure of $260 million.

Furthermore, the coronavirus crisis is expected to have had a minimal impact on F5 Networks’ business during the fiscal second quarter thanks to its efficient inventory management.

However, organizations are pushing back their big and expensive technology products due to the slowdown in global economic growth, which might have hurt the company’s fiscal second-quarter revenues.

Additionally, as more and more organizations continue shifting to cloud computing due to the maintenance-free and cost-effective nature, F5 Networks’ hardware business might have seen a declining trend during the quarter under review as well.

What Our Model Says

Our proven model does not predict an earnings beat for F5 Networks 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.

F5 Networks currently carries a Zacks Rank of 3 and has 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 in their upcoming releases:

Texas Instruments Incorporated (TXN - Free Report) has an Earnings ESP of +4.25% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet, Inc. (AVT - Free Report) has an Earnings ESP of +0.89% and holds a Zacks Rank of 2, currently.

Alphabet Inc. (GOOGL - Free Report) has an Earnings ESP of +4.16% and carries a Zacks Rank #3, at present.

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