AppFolio, Inc. APPF is set to report first-quarter 2016 results on May 9. Last quarter, the company posted a positive earnings surprise of 20%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Goleta, CA-based AppFolio offers cloud-based software solutions for property management and legal industries. The company launched its IPO in June last year and trades under the symbol “APPF”. The company offered 6.2 million shares at a rate of $12 each and projected net proceeds in a range of $71.4 million to $82.6 million.
Notably, the company had planned to use the proceeds to increase its financial flexibility and workforce as well as for research and development.
AppFolio’s fourth-quarter revenues surged 54% year over year to $20.4 million. Unfortunately, the company has had a history of incurring losses. In the last quarter, the company suffered a loss of $3.89 million compared with a loss of $4.57 million reported in the year-ago period.
Nevertheless, the company has been able to significantly increase its revenues on a year-over-year basis and the trend should continue in the to-be-reported quarter as well.
Additionally, the software solutions market for small-to-medium sized businesses is projected to reach $125 billion in 2016. If AppFolio can improve its profitability, it will be a valuable tech stock to add to one’s portfolio.
Our proven model does not conclusively show that AppFolio is likely to beat estimates 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: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 10 cents. Hence, the difference is 0.00%.
Zacks Rank: AppFolio’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
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.
Stocks to Consider
Here are a few companies worth considering which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Synopsys Inc. SNPS, with an Earnings ESP of +6.38% and a Zacks Rank #1 (Strong Buy).
Agilent Technologies, Inc. A, with an Earnings ESP of +2.56% and a Zacks Rank #3.
Asure Software, Inc. ASUR, with an Earnings ESP of +200.00% and a Zacks Rank #3.
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ASURE SOFTWARE (ASUR): Free Stock Analysis Report
SYNOPSYS INC (SNPS): Free Stock Analysis Report
AGILENT TECH (A): Free Stock Analysis Report
APPFOLIO INC-A (APPF): Free Stock Analysis Report
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