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F5 Networks (FFIV) to Post Q3 Earnings: What's in the Cards?

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F5 Networks Inc. (FFIV - Free Report) is set to report third-quarter fiscal 2018 results on Jul 25.

In the trailing four quarters, the company’s results surpassed the Zacks Consensus Estimate thrice and matched it once, delivering an average positive earnings surprise of 5.98%.

In the last reported quarter, the company’s non-GAAP earnings per share of $2.31 increased 18.5% year over year and surpassed the Zacks Consensus Estimate of $2.26. Moreover, F5 Networks’ revenues grew 2.9% year over year to $533.3 million and came ahead of the Zacks Consensus Estimate of $530 million.

For third-quarter fiscal 2018, F5 Networks expects revenues in the range of $535-$545 million. The Zacks Consensus Estimate is pegged at $539.97 million. The company expects non-GAAP earnings per share in the range of $2.36-$2.39. The Zacks Consensus Estimate is pegged at $2.38 per share.

F5 Networks, Inc. Price and EPS Surprise

F5 Networks, Inc. Price and EPS Surprise | F5 Networks, Inc. Quote

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play
    
F5 Networks’ growth in services and software solutions segment is a key driver. The company’s traction in public cloud deployments, given the surge in demand for security in the multi-cloud environment, is a tailwind.

We note that the company’s software offerings are gaining strength on the back of its virtual Application Delivery Controllers (ADC) in the public cloud. The launch of the company’s BIG-IP Cloud Edition in April is expected to enhance its growth further.

Moreover, the company’s growth opportunities in the security market are driven by its advanced Web Application Firewall (WAF). The company is witnessing an expansion in its addressable market and revenue growth prospects on the back of its WAF offerings.    

Additionally, the company’s recently launched iSeries platform is expected to attract customers, thereby boosting its top-line performance in the soon-to-be-reported quarter.

However, a volatile spending environment and increasing competition remain headwinds for F5 Networks’ revenue growth. Notably, Cisco Systems (CSCO - Free Report) poses the most significant competitive threat to F5 Networks, given the dominance of the former in the overall networking market.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

F5 Networks has a Zacks Rank #2 but its Earnings ESP is -0.87%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Castlight Health, Inc. (CSLT - Free Report) with an Earnings ESP of +11.11%, and a Zacks Rank #1. You can see see the complete list of today’s Zacks #1 Rank stocks here.

CyberArk Software Ltd. (CYBR - Free Report) with an Earnings ESP of +3.38% and a Zacks Rank #1.

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