Will Symantec (SYMC) Disappoint Q2 Earnings Estimates?
Symantec Corp. (SYMC) is set to report the second-quarter 2015 results on Nov 5. Last quarter, the company posted a positive earnings surprise of 10.8%. Moreover, it is worth noting that Symantec has outperformed the Zacks Consensus Estimate in all the four preceding quarters with an average positive surprise of 15.5%.
Let us see how things are shaping up for this announcement.
Factors to Consider
Symantec has delivered better-than-expected first-quarter results. Moreover, re-organization of its sales team and strength in Backup Appliances, Data Loss Prevention and Trust Services businesses positively impacted revenues. The company also provided modest second-quarter revenue guidance. Moreover, fiscal year outlook was encouraging.
We believe that strong demand for Symantec’s cyber security solutions and its adoption of new products should act as catalysts, going forward. Nonetheless, continued investments to launch new and innovative products could also impact margins in the near term.
However, investing in growth areas such as Enterprise backup, Storage Management and Security businesses are expected to drive the company’s long-term prospects. Moreover, Symantec’s restructuring initiatives and share buyback plans are expected to support its bottom line.
Execution risks remain on the restructuring initiatives undertaken by Symantec. If the company’s revamped go-to-market strategy does not yield the desired results, it will have a negative effect on its overall performance.
Separately, Symantec has confirmed the separation of its information management business from its consumer and enterprise software security businesses into two publicly listed companies. The entire process is expected to be completed by the end of fiscal 2015.
In fact, the separation comes at an opportune moment for Symantec as the initiative aims at streamlining its operations and maximizing shareholder’s value. This strategic move is also expected to help the company in reviving operational performance.
Earnings Whispers?
Our proven model does not conclusively show that Symantec will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 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 37 cents. Hence, the difference is 0.00%.
Zacks Rank: Symantec carries a Zacks Rank #4 (Sell).
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The Walt Disney Company (DIS), with an Earnings ESP of +3.41% and a Zacks Rank #2 (Buy).
Lumos Networks Corp. (LMOS), with an Earnings ESP of +15.39% and a Zacks Rank #2.
Manchester United plc (MANU), with an Earnings ESP of +33.33% and a Zacks Rank #3 (Hold).
Read the Full Research Report on SYMC
Read the Full Research Report on DIS
Read the Full Research Report on MANU
Read the Full Research Report on LMOS
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