The Q1 earnings season has started to gather steam, with results from 87 S&P 500 members having on board as of Apr 20.
Per the latest Earnings Preview, total earnings for the S&P 500 index in the first quarter are up 18.3% on a year-over-year basis driven by 7.7% growth in revenues.
Technology is one of the sectors anticipated to report double-digit earnings growth this quarter. Per the report, total earnings for the tech sector are projected to be up 20.9% and revenues are expected to be 11.5% higher on a year-over-year basis.
The sector faced several headwinds during the quarter related to trade restrictions, regulatory actions and data privacy and security.
However, the sector continues to benefit highly from the emerging trends of artificial intelligence (AI), machine learning, augmented and virtual reality (AR/VR) and increasing demand for cloud solutions and products. Moreover, growing adoption of autonomous car technology, advanced driver assisted systems (ADAS) and Internet of Things (IoT) presents significant growth opportunity.
Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here we take a look at three technology companies that are set to report quarterly numbers on Apr 25.
PayPal Holdings, Inc. (PYPL - Free Report) is set to report first-quarter 2018 results. The company’s strategic partnerships and strong adoption of mobile payment solutions are likely to drive its results in the going-to-be-reported quarter.
The company’s growth depends on two major metrics — Active Customer Accounts and Total Payment Volume. These two metrics are likely to play a pivotal role in the company’s performance during the quarter under review.
The company’s ongoing strategic partnership with Visa and Mastercard will also continue to benefit the company. Moreover, partnerships with Alphabet (GOOGL - Free Report) , Facebook and Alibaba are also helping it add new customers and increase payment volume. (Read more: What's in the Offing for PayPal This Earnings Season?)
However, PayPal has an unfavorable combination of a Zacks Rank #3 and Earnings ESP of -0.43%, which makes an earnings beat prediction difficult.
Citrix Systems, Inc. (CTXS - Free Report) is slated to report first-quarter 2018 results. The company’s Software-as-a-Service revenues are expected to register strong growth in the first quarter. Moreover, strong efforts to expand product portfolio and improving customer base are positive.
Further, the merger between LogMeIn and Citrix's GoTo business is expected to drive growth. Additionally, deployment of Citrix’s XenDesktop and XenApp on Oracle Cloud Marketplace is likely to bring in new customers which will aid the revenue generation in the soon-to-be reported quarter. (Read more: Citrix Systems Q1 Earnings: Is a Beat in the Cards?)
Citrix has a Zacks Rank #2 and an Earnings ESP of +0.07%, which indicates a likely positive earnings surprise this quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
F5 Networks, Inc. (FFIV - Free Report) is set to report second-quarter fiscal 2018 results.
F5 Networks is well poised to benefit from the growth prospects of the application-networking market with the help of its strong product portfolio. Moreover, continuous effort to enhance product offerings bode well and is likely to improve the customer base.
F5 Networks rolled out per application VE solutions to support web-application firewall and management of traffic. Also, the company recently launched iSeries platform, which is useful for new age applications such as Internet of Things.
The above mentioned endeavors are likely to boost the customer base, which in turn, will have a positive effect on the company’s second-quarter revenues. (Read more: F5 Networks to Post Q2 Earnings: A Beat in Store?)
F5 Networks carries a Zacks Rank #3 and has an Earnings ESP of +0.27%, which hints at an earnings beat in this quarter.
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