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Gogo Inc. (GOGO) Q3 Earnings: What's in Store this Time?
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Gogo Inc. (GOGO - Free Report) is slated to release third-quarter 2016 results on Nov 3. Last quarter, Gogo delivered a positive earnings surprise of 26.19%. Also, the company has posted an average positive earnings surprise of 12.24% over the past four quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider
Gogo boasts a dominant position among in-flight Wi-Fi service providers especially in its North America Commercial Aviation business. Also, Gogo’s onboard Internet connectivity services coupled with its innovative value-added services are likely to drive the top line going ahead.
The company reported encouraging second-quarter results. Though it posted a loss of 31 cents, it compared favourably with the Zacks Consensus Estimate of a loss of 42 cents. Also, the top line surpassed the consensus mark. Moreover, revenues increased on a year-over-year basis.
The company’s 2Ku service is gaining traction and can become a key growth driver going ahead. 2Ku is Gogo’s next generation satellite technology, which can offer peak speeds of over 70 Mbps to the aircraft, nearly 20 times the bandwidth provided by its first-generation Air to Ground solution in the U.S. With ATG getting highly congested, Gogo is trying to divert traffic to its 2Ku based satellite service. For the fourth quarter, the company said it has 2Ku backlog of 800 aircrafts. It plans to incorporate 2Ku technology in 75 planes in 2016 and increase the number fourfold by 2017.
However, despite its strength, Gogo’s business is not immune to competition and the resultant pricing pressure from peers like ViaSat Inc. (VSAT - Free Report) . In addition, higher operating expenses due to increased investment in the Commercial Aviation – Rest of World segment remain a concern.
Our proven model does not conclusively show that Gogo is likely to beat estimates 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: Gogo's Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 44 cents.Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Gogo carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of companies, which, as our model shows, have the right combination of elements to post an earnings beat this quarter:
Methanex Corporation (MEOH - Free Report) with an Earnings ESP of +600.0% and a Zacks Rank #3
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Gogo Inc. (GOGO) Q3 Earnings: What's in Store this Time?
Gogo Inc. (GOGO - Free Report) is slated to release third-quarter 2016 results on Nov 3. Last quarter, Gogo delivered a positive earnings surprise of 26.19%. Also, the company has posted an average positive earnings surprise of 12.24% over the past four quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider
Gogo boasts a dominant position among in-flight Wi-Fi service providers especially in its North America Commercial Aviation business. Also, Gogo’s onboard Internet connectivity services coupled with its innovative value-added services are likely to drive the top line going ahead.
The company reported encouraging second-quarter results. Though it posted a loss of 31 cents, it compared favourably with the Zacks Consensus Estimate of a loss of 42 cents. Also, the top line surpassed the consensus mark. Moreover, revenues increased on a year-over-year basis.
The company’s 2Ku service is gaining traction and can become a key growth driver going ahead. 2Ku is Gogo’s next generation satellite technology, which can offer peak speeds of over 70 Mbps to the aircraft, nearly 20 times the bandwidth provided by its first-generation Air to Ground solution in the U.S. With ATG getting highly congested, Gogo is trying to divert traffic to its 2Ku based satellite service. For the fourth quarter, the company said it has 2Ku backlog of 800 aircrafts. It plans to incorporate 2Ku technology in 75 planes in 2016 and increase the number fourfold by 2017.
However, despite its strength, Gogo’s business is not immune to competition and the resultant pricing pressure from peers like ViaSat Inc. (VSAT - Free Report) . In addition, higher operating expenses due to increased investment in the Commercial Aviation – Rest of World segment remain a concern.
GOGO INC Price and EPS Surprise
GOGO INC Price and EPS Surprise | GOGO INC Quote
Earnings Whispers
Our proven model does not conclusively show that Gogo is likely to beat estimates 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: Gogo's Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 44 cents.Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Gogo carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of companies, which, as our model shows, have the right combination of elements to post an earnings beat this quarter:
Carmike Cinemas Inc. with Earnings ESP of +166.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here
Methanex Corporation (MEOH - Free Report) with an Earnings ESP of +600.0% and a Zacks Rank #3
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>