Back to top

Analyst Blog

We expect NVIDIA Corporation (NVDA - Free Report) to beat earnings expectations when it reports third-quarter fiscal 2017 earnings results after the market closes on Nov 10.

Last quarter, the company posted a positive earnings surprise of 18.92%. The company boasts a solid earnings track record, having beaten estimates in each of the trailing four quarters. The average earnings surprise over the last four quarters is a positive 28.53%.

We expect the company to post an earnings beat again in the soon-to-be-reported quarter.

Why a Likely Positive Surprise?

Our proven model shows that NVIDIA is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.79%. This is very meaningful and a major indicator of a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: NVIDIA sports a Zacks Rank #1 (Strong Buy). Note that stocks with a Zacks Rank #1, #2 (Buy) or #3 (Hold) have a significantly higher chances of beating earnings estimates. Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of NVIDIA’s Zacks Rank #1 and ESP of +1.79% makes us confident of an earnings beat in the upcoming report.

NVIDIA CORP Price and EPS Surprise

NVIDIA CORP Price and EPS Surprise | NVIDIA CORP Quote

Growth Factors in Third Quarter

Widely known for its video gaming chips, NVIDIA has pioneered the art and science of visual computing. With a singular focus on this field, the company offers specialized platforms for the gaming, automotive, data center and professional visualization markets. Its products, services and software deliver amazing experiences in virtual reality, artificial intelligence and autonomous cars.

We believe that NVIDIA’s innovative product pipeline, and strength in gaming and high-end notebook GPUs bode well. Going forward, we are also optimistic on higher adoption of the company’s Tegra processors.

It is worth mentioning that NVIDIA’s focus on GRID platforms can drive GPU adoption in data centers, giving it an advantage over its competitors. We believe that its GRID enterprise virtual graphics, which improve visual effects in games, will help drive future revenue and margin growth.

Additionally, we are highly optimistic about the company’s autonomous business. NVIDIA’s foray into the autonomous vehicles and other automotive electronics space has been driving this stock higher since mid-2015. It should be noted that during the last reported quarterly results, the company witnessed a 68% year-over-year surge in automotive segment revenues, mainly driven by premium infotainment and digital cockpit features in mainstream cars.

The company provides various automotive technologies such as digital instrument clusters, navigation, advanced driver-assistance systems and infotainment under its partnership agreement with several automakers including Honda (HMC - Free Report) , Tesla Motors, Audi, Volvo, Mercedes-Benz and BMW. We believe these partnerships will aid NVIDIA’s results in the to-be-reported quarter.

Stocks to Consider

Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Asure Software Inc. (ASUR - Free Report) , with an Earnings ESP of +14.29% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.

TubeMogul, Inc. (TUBE - Free Report) , with an Earnings ESP of +8.00% 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>>