Will VeriFone's Earnings Beat Estimate?

Zacks

VeriFone Holdings (PAY) is set to report second quarter 2013 results on Jun 5. VeriFone reported first quarter earnings of 40 cents, which surpassed the Zacks Consensus Estimate by 3 cents. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

VeriFone reported mixed first quarter results where revenues grew a modest 1% from the year-ago quarter to $429.7 million. During the quarter, VeriFone won a managed services contract from China PnR. The company acquired New Zealand-based ENZ and Sektor Payments during the quarter. VeriFone expects these acquisitions to be completed by the end of second or third quarter.

VeriFone expects non-GAAP revenues to be in the range of $435.0 million to $450.0 million for the second quarter of 2013. Management expects second quarter non-GAAP earnings to be in the range of 45 cents to 50 cents per share.

Earnings Whispers?

The Zacks Consensus Estimate for the second quarter stands at 39 cents while that for fiscal 2013 stands at $1.66.

VeriFone posted positive surprises in the last four quarters with an average surprise of 3.36%.There were no estimate revisions for both the second quarter and fiscal 2013 over the past 30 days. As a result, the Zacks Consensus Estimate for both periods has remained unchanged.

The chances of a big surprise are unlikely given the lack of catalysts during the quarter. The stock carries a Zacks Rank #3 (Hold).

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, consider stocks like:

Pegasystems Inc (PEGA), Earnings ESP of +14.29% and Zacks Rank #1 (Strong Buy)

Callidus Software (CALD), Earnings ESP of +20.00% and Zacks Rank #2 (Buy)

Yahoo! (YHOO), Earnings ESP of +3.85% and Zacks Rank #2 (Buy)
 

Read the Full Research Report on PAY

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Read the Full Research Report on CALD

Read the Full Research Report on PEGA

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