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Is Juniper (JNPR) Likely to Disappoint This Earnings Season?

Zacks Equity Research

Juniper Networks, Inc. JNPR is scheduled to report third-quarter 2019 financial results after the closing bell on Oct 24. In the last reported quarter, the company’s earnings matched the Zacks Consensus Estimate.

However, the computer network equipment maker is likely to have experienced softness within the Routing and Switching verticals as stiff competition led to an average decline in selling prices in the third quarter. The results for the quarter are expected to reflect the same.

Factors at Play

During the third quarter, Juniper inked a strategic deal with Aston Martin to deploy its networking solutions to improve data connectivity and cater to exponential growth in network traffic. This is likely to positively reflect on the results.

Furthermore, Juniper secured a contract from PYXYA — a French service provider — to offer Contrail SD-WAN solutions to meet the growing enterprise demand for secure branch connectivity. The deal is likely to have translated into incremental revenues in the third quarter for the company’s Enterprise business.

Similar to the prior quarter, customers are likely to have shifted from single-vendor private cloud environments to a multi-vendor multi-cloud state facilitated by the combination of Contrail Enterprise Multi-cloud and QFX switches. This trend is expected to be reflected in Cloud business’ third-quarter results, wherein revenues are expected to improve 14% year over year to $285 million.

However, revenues from Routing are expected to decline 11.2% as the company passes through the transition phase with the blended pricing of the new product deployments taking its time to be accretive. Net revenues from Switching are expected to fall to $213 million from $221 million, while the same from Security is likely to rise to $82 million from $77 million.

The Zacks Consensus Estimate for revenues from the Product segment (comprising Routing, Switching and Security products), which accounts for the lion’s share of total revenues, is pegged at $741 million, indicating a 6.7% decline from the year-ago reported figure. Revenues from the Service segment are anticipated to increase to $398 million from $385 million due to strong renewals and attach rates of support contracts.

Total revenues for the quarter are estimated to fall to $1,142 million from $1,180 million, reported in the year-earlier quarter. Adjusted earnings per share are pegged at 46 cents. The company reported earnings of 54 cents a year ago.

Earnings Whispers

Our proven model does not predict an earnings beat for Juniper this time around. 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. This is not the case here.

Earnings ESP: Juniper’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Juniper Networks, Inc. Price and EPS Surprise


Juniper Networks, Inc. Price and EPS Surprise

Juniper Networks, Inc. price-eps-surprise | Juniper Networks, Inc. Quote

Zacks Rank: Juniper currently has a Zacks Rank #4 (Sell).

Stocks to Consider

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

Verizon Communications Inc. VZ with an Earnings ESP of +0.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AT&T, Inc. T with an Earnings ESP of +0.50% and a Zacks Rank #3.  

T-Mobile US, Inc. TMUS with an Earnings ESP of +0.55% and a Zacks Rank #2.

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