Back to top

Symantec's (SYMC) Q1 Earnings: Is a Beat in the Offing?

Read MoreHide Full Article

Symantec Corporation (SYMC - Free Report) is scheduled to report first-quarter fiscal 2019 results on Aug 2. The company beat estimates thrice in the trailing four quarters, delivering an average positive surprise of 7.35%.

In the last reported quarter, Symantec’s earnings per share increased 64.3% year over year to 46 cents, topping the Zacks Consensus Estimate of 40 cents. The company’s revenues increased 10% to $1,222 million, surpassing the Zacks Consensus Estimate of $1,194 million.

For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at 33 cents, flat year over year. For revenues, the consensus estimate stands at $1,150 million, indicating 2.13% decrease from the prior-year quarter.

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

Factors at Play

Symantec stands to gain from data breaches as chances of security-related purchases continue to shoot up. The demand for cybersecurity-related products got fresh momentum due to last year’s two back-to-back ransomware, which created global havoc. Symantec, which has been enhancing its identity-theft protection capabilities through strategic acquisitions, will most likely have continued to cash in on this opportunity.

Moreover, the company’s cost-saving strategy and successful acquisitions of Blue Coat and LifeLock, which primarily drives the Consumer Digital Safety business, continue to aid its earnings growth. The Consumer Digital Safety segment constitutes nearly half of the entire business.

Symantec is expected to benefit from improvement in PC shipments in the quarter under review. Per Gartner and IDC, after a period of prolonged sluggishness, the PC industry benefited in the second quarter from the improving demand from businesses customers.

Additionally, a strategic alliance with Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) to deliver its Web Security Service products through cloud may boost margin growth.

However, Symantec’s weaker-than-expected outlook for the fiscal first quarter makes us slightly cautious about its performance. The reduction in margins is mainly due to continued shift of business model to ratable revenues and increased investment in sales and marketing capacity. This might reflect in the quarterly results.

The ongoing internal investigation on some issues raised by a former employee, remain a major concern. The investigation, which had led the stock to crash early in May, may throw light on serious issues which might severely cost the company.

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.

Symantec has a Zacks Rank #3 and an Earnings ESP of +0.25%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Symantec Corporation Price and EPS Surprise


Symantec Corporation Price and EPS Surprise | Symantec Corporation Quote

A Stock to Consider

Here is another stock, which you may consider as our model shows that this has the right combination of elements to post an earnings beat in their upcoming releases:

Turtle Beach Corporation (HEAR - Free Report) with an Earnings ESP of +57.14%, and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

More from Zacks Analyst Blog

You May Like

Published in