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Will Demand Media (DMD) Beat Estimates in Q2 Earnings?

Zacks Equity Research

We expect Demand Media, Inc. DMD to beat expectations when it reports second-quarter 2016 results on Aug 4, 2016.

Why a Likely Positive Surprise?

Our proven model shows that Demand Media is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (loss of 35 cents) and the Zacks Consensus Estimate (loss of 43 cents), stands at +18.61%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3: Note that stocks with Zacks Rank of #1 (Strong Buy), 2 (Buy) and 3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of Demand Media’s Zacks Rank #3 and +18.61% ESP makes us very confident in looking for a positive surprise.
 

DEMAND MEDIA Price and EPS Surprise

DEMAND MEDIA Price and EPS Surprise | DEMAND MEDIA Quote

 

What's Driving the Better-Than-Expected Results?

The company’s enriched product portfolio is expected to lead to a positive surprise in the to-be reported quarter. Moreover, Demand Media is coming up with customized products to cater to new customers and gain traction in the markets.

Additionally, synergies from acquisitions and product innovations continue to drive growth. Also, revenue addition from the Saatchi Art acquisition would support the company’s top line.

Moreover, it is noteworthy that Demand Media has surpassed the Zacks Consensus Estimate in three out of the last four quarters with an average positive surprise of 2.78%.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

CDK Global, Inc. CDK, with an Earnings ESP of +4.26% and a Zacks Rank #1

Qualys, Inc. QLYS, with an Earnings ESP of +12.50% and a Zacks Rank #3

CenturyLink, Inc. CTL with an Earnings ESP of +1.70% and a Zacks Rank #3

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DEMAND MEDIA (DMD): Free Stock Analysis Report
 
QUALYS INC (QLYS): Free Stock Analysis Report
 
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CENTURYLINK INC (CTL): Free Stock Analysis Report
 
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