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EPAM Systems (EPAM) to Report Q1 Earnings: What's in Store?

EPAM Systems EPAM is scheduled to report first-quarter 2022 results on May 5.

In the last reported quarter, the company delivered an earnings surprise of 10.4%. EPAM surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.3%.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $1.02 billion, suggesting growth of 30.6% from the year-ago reported figure. The consensus mark for earnings stands at $1.85 per share, indicating an increase of 2.2% from the $1.81 reported in the year-ago period.

Factors to Note

EPAM’s first-quarter performance is likely to have been severely impacted by the discontinuation of its business in Russia following the Kremlin forces invasion of Ukraine. The company has significant exposure in the region, with the majority of its delivery centers in Central and Eastern Europe (“CEE”). The company’s largest delivery centers are in Belarus, Russia and Ukraine. It had approximately 9,000 and 14,000 employees in Russia and Ukraine, respectively.

In the fourth quarter of 2021, revenues from CEE were $55 million (accounting for 5% of total revenues). In fiscal 2021, EPAM generated $168 million of revenues from CEE. However, the ongoing conflict is likely to have hurt the company’s revenues and profitability from this region.

Citing uncertainties and regional impacts resulting from military actions in Ukraine, in late February, the company withdrew its first-quarter and 2022 financial guidance. Earlier, the company expected revenues between $1.170 billion and $1.180 billion in the first quarter, suggesting year-over-year growth of 50% at the midpoint. Non-GAAP earnings were expected in the band of $2.58-$2.66 per share.

Supply-chain constraints are predicted to have weighed on EPAM’s first-quarter performance.

However, EPAM’s first-quarter performance is likely to have benefited from strong demand for its services, driven by the accelerated digital modernization across several industries in continued response to economic changes post COVID-19.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for EPAM this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

EPAM currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -16.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Alcon ALC, Stantec STN and Simon Property Group SPG have the right combination of elements to post an earnings beat in their upcoming releases.

Alcon is slated to report first-quarter 2022 results on May 10. The company carries a Zacks Rank #2 and has an Earnings ESP of +10.04% at present. Alcon’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 16.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for quarterly earnings is pegged at 52 cents per share, suggesting a year-over-year improvement of 6.1%. ALC’s quarterly revenues are estimated to increase 6.8% year over year to $2.04 billion.

Stantec carries a Zacks Rank #2 and has an Earnings ESP of +8.05%. The company is scheduled to report first-quarter 2022 results on May 11. Stantec’s earnings surpassed the Zacks Consensus Estimate twice in the trailing four quarters, matched the same once and missed on one occasion, the average surprise being 0.1%.

The Zacks Consensus Estimate for STN’s first-quarter earnings is pegged at 47 cents per share, indicating a year-over-year increase of 23.7%. The consensus mark for revenues stands at $814.1 million, suggesting a year-over-year increase of 20.7%.

Simon Property currently carries a Zacks Rank #3 and has an Earnings ESP of +0.50%. The company is slated to report its first-quarter 2022 results on May 9. Simon Property’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 16.9%.

The Zacks Consensus Estimate for Simon Property’s first-quarter earnings stands at $2.74 per share, implying a year-over-year increase of 10.5%. SPG is estimated to report revenues of $1.33 billion, which suggests growth of 7.3% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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