NetApp NTAP is slated to release fourth-quarter fiscal 2023 earnings on May 31.
The company projects fiscal fourth-quarter non-GAAP earnings per share to be between $1.30 per share and $1.40 per share. The Zacks Consensus Estimate is pegged at $1.35, suggesting a 4.9% decline from the year-ago quarter’s reported figure.
Net revenues are expected in the range of $1.475-$1.625 billion. The Zacks Consensus Estimate is pegged at $1.54 billion, suggesting a decline of 8.1% year over year.
NTAP beat estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 9%, on average.
NetApp, Inc. Price and EPS Surprise
NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote
Factors to Note
Weakness in global macroeconomic conditions, softening IT spending environment and cloud cost optimization efforts by clients are likely to have affected NetApp’s performance in the to-be-reported quarter. Increased budget scrutiny by clients, leading to smaller deal sizes and extended selling cycles, is likely to have acted as a dampener.
Also, unfavorable forex movements, lingering supply-chain troubles, increases in freight and logistical expenses, and higher component costs are expected to have acted as headwinds.
Nonetheless, NTAP’s extensive cost control measures, and lowering investment policy in products with relatively lesser revenue potential like SolidFire and Astra Data Store are likely to help it navigate the current challenges.
The company is also focusing on its Hybrid Cloud business. The launch of the new cost effective AFF C-Series, which is QLC-based all-flash arrays that cover a wide array of workloads, bodes well. This solution is expected to aid customers navigate a highly cost-sensitive environment.
NetApp’s strengthening go-to-market activities, various cloud collaborations and continued product innovation amid an accelerating digital transformation remain major positives. Healthy adoption of new product launches like NetApp BlueXP augurs well. NetApp BlueXP is a unified control plane that provides hybrid multi-cloud experience for data and storage services.
Renewed momentum in Spot by NetApp portfolio might have aided the Public Cloud Services business. Strong demand for other cloud solutions like Azure NetApp files, Cloud Volumes and Cloud Insights services is likely to have benefited the company in the quarter under review. Spot by NetApp enables enterprises to make multi-cloud management easier and lower expenses at the same time.
Synergies from the buyouts of CloudCheckr and Data Mechanics bode well. NetApp’s other buyouts include Fylamynt and Instaclustr.
For fiscal fourth quarter, the Zacks Consensus Estimate for Hybrid Cloud segment’s revenues is pegged at $1.4 billion.
For fourth-quarter fiscal 2023, the Zacks Consensus Estimate for Public Cloud Services revenues is pegged at $152 million.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for NetApp this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
NetApp has an Earnings ESP of -1.86% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.
Macy’s M has an Earnings ESP of +2.81% and presently carries a Zacks Rank #3. M is scheduled to release quarterly numbers on Jun 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for M’s to-be-reported quarter’s earnings is pegged at 46 cents per share. The consensus estimate is pegged at $5.11 billion for revenues. The stock has lost 40.1% in the past year.
Zscaler (ZS) has an Earnings ESP of +4.47% and currently carries a Zacks Rank #3. ZS will release quarterly numbers on Jun 1.
The Zacks Consensus Estimate for ZS’ to-be-reported quarter’s earnings is pegged at 42 cents per share. For revenues, the consensus estimate is pegged at $410.7 million. The stock has declined 20.8% in the past year.
Lululemon Athletica LULU has an Earnings ESP of +0.24% and carries a Zacks Rank #3, at present. LULU is slated to release quarterly numbers on Jun 1.
The Zacks Consensus Estimate is pegged at a loss of $1.97 per share. The consensus estimate for revenues is pegged at $1.92 billion. The stock has gained 16.6% in the past year.
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