Web.com Group Inc. is scheduled to release third-quarter 2017 results on Nov 7. The company has delivered an average positive earnings surprise of 7.96% in the trailing four quarters.
Moreover, the online marketing services provider posted adjusted revenues of $188.1 million in second-quarter 2017 compared with $193.9 million in the year-ago period.
For third-quarter 2017, Web.com projects non-GAAP revenues to be in the range of $187–$190 million.
Notably, Web.com has gained 18.8% year to date, slightly underperforming the 21.6% rally of the industry it belongs to.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Web.com’s top line is expected to be driven by Web Brand Networks. The company is doing well in the vertical market. Its focus on real estate and dental markets is a positive.
We believe the company’s TORCHx and Lighthouse 360 solutions will enable it to bring in more customers and therefore drive growth.
Notably, Web.com has been undertaking strategic acquisitions to boost its operations. The company’s acquisition of Donweb.com last year and Scoot in 2014 will continue to accelerate overseas expansion in our view.
However, decline in overall retail business and decreasing net new subscribers are headwinds. Also, an increasingly competitive business environment remains a concern.
Our proven model does not conclusively show that Web.com is likely to beat earnings 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. This is not the case here as you will see below:
Zacks ESP: Web.com’s Earnings ESP is +0.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Web.com carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Adobe Systems Inc. (ADBE - Free Report) has an Earnings ESP of +0.25% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kemet Corporation (KEM - Free Report) has an Earnings ESP of +7.46% and carries a Zacks Rank #1.
NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.71% and carries a Zacks Rank #1.
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