The bulk of the third-quarter earnings season is behind us with 455 S&P 500 members, representing 91% of the index’s total market capitalization, having already reported their results.
As of Nov 11, total earnings of these companies are up 3.9% on a year-over-year basis (72.7% of the companies beat EPS estimates) while total revenue is up 2.7% on a year-over-year basis (55.4% of the companies beat top-line estimates).
The earnings recession is expected to end in the third quarter with positive growth arriving ahead of schedule. The third quarter can be interpreted as an inflection point where the growth trend is finally shifting from the negative territory to the positive territory.
Notably, after five consecutive quarters of decline, earnings are finally back in the positive territory and the overall picture is that of improvement. Moreover, the proportion of companies beating both the topline and the bottomline estimates are modestly tracking above historical periods.
As per our latest Earnings Preview report, overall third-quarter earnings for S&P 500 companies are anticipated to be up 3.4% (compared to an earlier estimate of a rise of 3.3%) from the year-ago quarter on revenues that are estimated to increase 1.5%.
While solid results from the finance sector buoyed the index higher, sluggish growth from the energy, autos, transportation and technology sectors was a drag.
Coming to the technology sector, overall earnings are up 4.5% and margins are marginally higher at 0.9%.
Here we take a look at three technology companies that are set to report their quarterly earnings on Nov 15:
Diebold Inc (DBD - Free Report) is unlikely to beat third-quarter 2016 estimates as it has an unfavorable combination of a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1(Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Diebold develops, manufactures, sells and services automated teller machines, electronic and physical security systems, various products used to equip bank facilities, software and integrated systems for global financial and commercial markets.
During the last quarter, the company acquired Wincor Nixdorf, which is likely to bolster the company’s capability of providing customized solutions for the financial and retail industries and have a positive impact in the to-be reported quarter.
However, macroeconomic conditions and regulatory changes remain matter of concerns ahead of the results.
We note that Diebold’s results compared favorably with the Zacks Consensus Estimate in two out of the last four quarters, resulting in an average positive surprise of 1.19%.
Similarly, Stratasys Ltd. (SSYS - Free Report) too is unlikely to beat third-quarter 2016 estimates as it has an unfavorable combination of a Zacks Rank #1 and an Earnings ESP of 0.00%.
Stratasys operates as a manufacturer of 3D printers and materials. The company's systems are used by manufacturers to create models and prototypes to aid in the new product design process.
During the last quarter, the company demonstrated its capabilities in next generation 3D printing technology for achieving enhanced performance and production. Moreover, recently Stratasys entered into a new strategic partnership with Schneider Electric per which the French multi-national company will incorporate the 3D printing company’s technology into its manufacturing processes.
While such developments augur well for the company, fast changing technology, pricing pressure and competition might pose a concern in the to-be reported quarter.
Notably, Stratasys’ results have beaten the Zacks Consensus Estimate in the preceding four quarters with an average positive surprise of 65.45%.
Last but not the least, MACOM Technology Solutions Holdings Inc. (MTSI - Free Report) too is unlikely to beat fourth-quarter fiscal 2016 estimates as it has an unfavorable combination of an Earnings ESP of 0.00% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.
MACOM Technology provides analog semiconductor solutions for use in wireless and wireline applications across the RF, microwave and millimeterwave spectrum. The company's primary markets are Networks, which includes CATV, cellular backhaul, cellular infrastructure and fiber optic applications, A&D and Multi-market, which includes automotive, industrial, medical, mobile and scientific applications.
During the last quarter, the company introduced new transmitter/receiver solutions for short reach applications and added two new wideband amplifiers to its high-performance MMIC portfolio.
Although the introduction of such leading technologies remain positives for the company, growing competition in the primary markets namely, networks, optical networks and others remain a concern in the to-be reported quarter.
Notably, MACOM Technology’s results have beaten the Zacks Consensus Estimate in two of the preceding four quarters. It has an average four-quarter negative surprise of 7.49%.
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