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DocuSign (DOCU) Q3 Earnings to See Impacts of SpringCM Buyout

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DocuSign, Inc. (DOCU - Free Report) will report third quarter fiscal 2019 results on Dec 6, after the bell. The stock rose 5.2% year to date, against the 2.7% decline of the industry it belongs to.

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

Revenues to Remain Solid

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $174 million, reflecting 4.2% sequential growth.

The upside is likely to be driven by geographical as well as vertical markets. The company continues to focus on attracting new customers and increasing usage among existing ones to ensure consistent top-line growth. Its core markets are in good shape, which has ensured constant customer addition. DocuSign acquired SpringCMin the to-be-reported quarter and expects it to contribute $2-$4 million to revenues.

The Bottom Line to Stay Weak

In spite of boosting the top line, SpringCM is likely to weigh on the bottom line. The Zacks Consensus Estimate for earnings is pegged at a loss of 2 cents. Operating expenses, mainly in sales and marketing and R&D, are expected to rise due to the acquisition. The company is also expected to incur integration cost.

Our Model Does Not Suggest a Beat

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. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

DocuSign has an Earnings ESP of 0.00% and a Zacks Rank #3, a combination that lowers the chances of an earnings beat.

Stocks to Consider

Here are some stocks that you may want to consider as our model shows these have the right combination of elements to deliver a positive earnings surprise:

Automatic Data Processing, Inc (ADP - Free Report) has an Earnings ESP of +0.21% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiserv, Inc has an Earnings ESP of +0.84% and a Zacks Rank #3.

Waste Management, Inc (WM - Free Report) has an Earnings ESP of +0.70% and a Zacks Rank #3.

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