Will Teradata (TDC) Surprise Estimates this Earnings Season? - Analyst Blog
Teradata Corp. TDC is set to report second -quarter 2015 results on May 7. Last quarter, the company posted a 40.54% negative earnings surprise. The company has posted an average negative earnings surprise of 6.17% over the past four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Teradata is a leading provider of data warehousing and enterprise analytics. For the 14th consecutive year, the company has been categorized as a leader in Gartner’s Magic Quadrant for Data Warehouse Database Management Systems, followed by Oracle ORCL and International Business Machines Corporation IBM, According to market research firm TechNavio, the data warehousing market is expected to grow at a compound annual growth rate (CAGR) of 11.16% over the period 2014-2018.
We believe that new customer wins and strengthening relationships with large vendors will be the primary revenue drivers for the second quarter. Teradata’s international expansion, improved traction from sales force expansion, new products and alliances, market share gains and a growing database analytics market should aid results in the to-be-reported quarter.
However, increased investment in sales, a sluggish spending environment in the domestic market and increasing competition from EMC Corp, NetApp and Nimble Storage are resulting in continued pricing pressure that will likely limit margin expansion in the rest of 2015.
Earnings Whispers
Our proven model does not conclusively show that Teradata is likely to beat earnings this quarter. This 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: The Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 9 cents per share.
Zacks Rank: Teradata carries a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.
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.
Stock to Consider
Here is another company which you may consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:
Amtech Systems Inc. ASYS, with an Earnings ESP of +8.00% and a Zacks Rank #3.
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