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NetApp (NTAP) to Report Q2 Earnings: What's in the Cards?

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NetApp Inc. (NTAP - Free Report) is set to report fiscal second-quarter 2018 results on Nov 15. Notably, the company’s earnings have beaten the Zacks Consensus Estimate in the four trailing quarters, with an average positive surprise of 9.9%.

Last quarter, the company delivered a positive earnings surprise of 12.7%. It reported earnings of 62 cents per share, which surged 34.8% year over year but declined 27.9% sequentially.

Revenues increased 2.4% from the year-ago quarter but decreased 10.5% from the previous quarter to $1.33 billion, surpassing the Zacks Consensus Estimate of $1.32 billion.

For the second quarter, NetApp expects non-GAAP earnings per share in the range of 64-72 cents. Net revenues are anticipated to be in the range of $1.31-$1.46 billion, which at the mid-point implies 3.4% growth from the year-ago quarter and 4.5% growth sequentially.

NetApp stock has gained 31.4% year to date, outperforming the 21% rally of the industry it belongs to.

Factors to Consider

During the soon-to-be-reported quarter, NetApp partnered with Pixit Media for the purpose of providing scalability and quicker as well as reliable content access to Framestore, a prominent creative studio.

Notably, CloudOps, a cloud consulting and services company, created an on-premise subscription based software, backed by NetApp’s flash storage system, SolidFire. This infrastructure-as-a-service (IaaS) software will work as a self-service portal primarily for management of cloud service orchestrator services.

Additionally, the enhancement of the solutions portfolio with the addition of NVMe-enabled solution on the market and NetApp Converged Infrastructure Solution for Data Analytics is expected to drive its top line. Further, the enrichment of hybrid cloud data services with NetApp SolidFire Element OS, StorageGRID Webscale, ONTAP and OnCommand Insight software solutions are further tailwinds.

We note that the company’s initiative to deliver better digital customer experience is also evident from the launch of its artificial intelligence (AI) enabled virtual support assistant, Elio. Coupled with NetApp Active IQ, Elio will provide required insights about customers.

Moreover, NetApp’s partnership with Microsoft (MSFT - Free Report) in the second-quarter for the development of the industry’s first cloud-based enterprise Network File System (NFS) to be delivered via Azure is anticipated to be a top-line booster.

Notably, the Zacks Consensus Estimate for Hardware Maintenance and Other Services revenues is $373 million. Product revenues are estimated to be $773 million and Software Subscription revenues are anticipated to be around $236 million in second-quarter 2018.

NetApp, Inc. Price and EPS Surprise

NetApp, Inc. Price and EPS Surprise | NetApp, Inc. Quote

Zacks Rank and Stocks to Consider

NetApp has a Zacks Rank #2 (Buy).

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

Axcelis Technologies, Inc. (ACLS - Free Report) with an Earnings ESP of +9.35% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Adobe Systems Inc. (ADBE - Free Report) with an Earnings ESP of +0.10% and a Zacks Rank #1.

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