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Is a Beat Likely for Nutanix (NTNX) This Earnings Season?

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Nutanix (NTNX - Free Report) is likely to beat expectations when it reports fourth-quarter fiscal 2022 results after market close on Aug 31.

For the quarter to be reported, Nutanix expects revenues to be $340-$360 million. The Zacks Consensus Estimate for Nutanix’s fiscal fourth-quarter revenues is pegged at $353.9 million, suggesting a fall of 9.4% from the year-ago reported figure.

The Zacks Consensus Estimate for the bottom line stands at a loss of 39 cents per share, significantly wider than the year-ago quarter’s loss of 26 cents per share.

The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 59.5%.

Nutanix Price and EPS Surprise

 

Factors to Note Ahead of Q4 Results

Nutanix’s continued focus on enhancing its go-to-market productivity levels through efficient digital marketing spending, optimizing headcounts and leveraging its channel partners might have positively impacted the to-be-reported quarter’s performance.

The company anticipates Annual Contract Value (“ACV”) billings between $175 million and $185 million in the fiscal fourth quarter. It expects the average contract term length to remain flat in the quarter under review, primarily due to lower federal business. Note that the average contract term length declined to 3.2 years in the third quarter from the year-ago quarter’s figure of 3.3 years.

Nutanix expects the non-GAAP gross margin to be approximately 79-80%. The company manages expenses with several cost-reduction methods. This may have contributed to margins.

Non-GAAP operating expenses are projected in the range of $360-$365 million and it estimates increased utilization of cash during the quarter.

Expansion in the company’s customer base as a result of the strategic partnership with Red Hat is likely to have contributed to the company’s fourth-quarter performance. Specifically, an increase in Acropolis Hypervisor Virtualization adoption rate might get reflected in the to-be-reported quarter’s top line.

Nutanix’s fiscal fourth-quarter performance is likely to have benefited from robust growth in its hyper-converged solutions and automation services. The ongoing shift to cloud solutions due to the hybrid-working trend might have acted as a key catalyst in the quarter to be reported.

However, the ongoing transition to a subscription-based business model and increased hardware supply shortages might have weighed on the fiscal fourth-quarter top line.

Earnings Whispers

Our proven model predicts an earnings beat for NTNX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +4.66%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Nutanix carries a Zacks Rank #3.

Other Stocks With the Favorable Combination

Per our model, RH (RH - Free Report) , CarMax (KMX - Free Report) and MasterCraft Boat (MCFT - Free Report) also have the right combination of elements to post an earnings beat in their upcoming releases.

RH has a Zacks Rank #3 and an Earnings ESP of +4.24%. The company is expected to report second-quarter fiscal 2023 results on Sep 14. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for the fiscal second-quarter earnings of RH is pegged at $6.82 per share, suggesting a year-over-year decline of 19.6%. The consensus mark for revenues stands at $970.8 million, indicating a drop of 1.8% year over year.

CarMax is expected to report second-quarter fiscal 2023 results on Sep 29. The stock has a Zacks Rank #3 and an Earnings ESP of +1.59%. Its earnings beat the Zacks Consensus Estimate in two of the preceding four quarters and missed twice, the average surprise being 7.14%.

The Zacks Consensus Estimate for KMX’s quarterly earnings stands at $1.47 per share, suggesting a year-over-year decline of 14.5%. Its quarterly revenues are estimated to decrease 9.8% year over year to $8.77 billion.

MasterCraft Boat has a Zacks Rank #3 and an Earnings ESP of +1.74%. The company is scheduled to report its fourth-quarter fiscal 2022 results on Sep 8. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 17.4%.

The Zacks Consensus Estimate for MCFT’s fourth-quarter earnings is pegged at $1.49 per share, suggesting year-over-year growth of 52%. The consensus mark for revenues stands at $195.1 million, indicating a year-over-year improvement of 25.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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