Back to top

Analyst Blog

Internet software firm MaxPoint Interactive, Inc. (MXPT - Free Report) is scheduled to report third-quarter 2016 results after the closing bell on Nov 10.

The company, which went public in early Mar 2015, missed earnings estimates by 3 cents in the last reported quarter with a negative earnings surprise of 3.0%. MaxPoint has beaten earnings estimates thrice in the trailing four quarters with an average positive earnings surprise of 18.3%. Let’s see how things are shaping up for this announcement.

Key Factors in the Third Quarter

MaxPoint’s proprietary Digital Zip technology and the MaxPoint Intelligence Platform give it a distinctive advantage in a highly competitive landscape, setting it apart from its peers. It helps draw sales by predicting the most likely local buyers of a particular product at a specific retail location and then targeting cross-channel digital marketing programs at these buyers.

MAXPOINT INTER Price and EPS Surprise

 

MAXPOINT INTER Price and EPS Surprise | MAXPOINT INTER Quote

During the quarter, MaxPoint formed a strategic alliance with Adobe Audience Manager, the data management platform within Adobe Marketing Cloud. Adobe Audience Manager consolidates audience information from all available sources, helping identify and reach key audience segments with relevant and customized digital experiences. The collaboration will facilitate marketers to access MaxPoint’s unique real-time location and purchase intent insights for personalized marketing efforts. The partnership is likely to result in incremental revenues for MaxPoint.

At the same time, MaxPoint also forged a data integration partnership with LiveRamp, a leading provider of data connectivity and onboarding services. The partnership powers smarter advertising decisions by making MaxPoint’s unique data available within a marketer’s preferred platforms for targeting, measurement and data management. Audience data is dynamically updated so that personalized desktop and mobile ads can be delivered to any consumer device at the optimal time. The alliance is likely to drive higher revenues during the quarter.

Despite the growing demands for digital advertising services and cloud-based software service, MaxPoint functions in a highly competitive and fragmented industry. Thus, the company has to be on par with its competitors, which may call for higher expenses relating to research and development. In turn, these expenses are expected to shrink the company’s profits.

In addition, as the European economy is highly unpredictable post the Brexit referendum, it becomes difficult for the company to increase revenues and reduce costs. In addition, MaxPoint is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering the productivity of the company.

Earnings Whispers

Our proven model does not conclusively show that MaxPoint is likely to beat earnings this quarter as it lacks the key components. 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. This is not the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: MaxPoint’s Zacks Rank #3 when combined with 0.00% ESP makes an earnings prediction uncertain. Note that 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 a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Lonestar Resources US Inc. (LONE - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #2.

Diamondback Energy Inc. (FANG - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Comstock Resources Inc. (CRK - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #2.

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>>