Will Nielsen's (NLSN) Earnings Disappoint Estimates in Q2? - Analyst Blog
Nielsen Holdings N.V. NLSN is set to report second-quarter 2015 results on Jul 28. Last quarter, the company posted in-line results.
Let’s see how things are shaping up for this announcement.
Factors at Play
The company’s first-quarter earnings were in line with the Zacks Consensus Estimate. However, revenues were down sequentially as well as year over year due to weakness in the Buy segment and unfavorable foreign currency impact.
Gross margins came in at 57.3%, up 40 basis points from the year-ago quarter. Nielsen’s operating expenses decreased 1.1% year over year to $630.0 million backed by solid cost management.
Nielsen’s continuous effort to increase its geographic reach requires it to maintain uniformity and integrity of information and fundamental processes globally. Moreover, the company continues to invest in technology and infrastructure to keep pace with clients’ demands and gain a competitive advantage. These investments are likely to weigh on the second-quarter margins.
Earnings Whispers
Our proven model does not conclusively show that Nielsen Holdings is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 60 cents. Therefore, the Earnings ESP is 0.00%.
Zacks Rank: Nielsen carries a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:
FTI Consulting, Inc. FCN, with an Earnings ESP of +2.17% and a Zacks Rank #1.
Dean Foods Company DF, with an Earnings ESP of +3.85% and a Zacks Rank #1.
Gruma S.A.B. de CV GMK, with an Earnings ESP of +9.68% and a Zacks Rank #1.
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