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Bear Of The Day: AudioCodes (AUDC)

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AudioCodes (AUDC) is a Zacks Rank #5 (Strong Sell), and the company recently broke a streak of three straight beats of the Zacks Consensus Estimate. Breaking that streak didn’t make the Zacks Rank fall to a #5, but it did fall to the lowest level. Let’s take a look at why that is the case in this Bear of the Day article.

Description

AudioCodes Ltd. is a vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.

In the case of AUDC, I see three beats and one meet of the Zacks Consensus Estimate. This alone does not make the stock a Zacks Rank #5 (Strong Sell).

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For AUDC, I see estimates fluctuating.

This quarter has dipped from $0.39 to $0.38.

Next quarter has remained at $0.43 over the last 60 days.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is negative for those numbers.

The 2021 consensus number has fallen from $1.55 to $1.53.

The 2022 number has moved from $1.67 to $1.63 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing positive earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

Chart

AudioCodes Ltd. Price and Consensus

AudioCodes Ltd. Price and Consensus
AudioCodes Ltd. Price and Consensus

AudioCodes Ltd. price-consensus-chart | AudioCodes Ltd. Quote


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