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NortonLifeLock (NLOK) to Post Q3 Earnings: What's in Store?

Zacks Equity Research

NortonLifeLock, Inc. NLOK is set to report third-quarter fiscal 2020 results on Feb 6.

For the quarter, the company anticipates revenues between $602 million and $612 million (down 2% to flat year over year). The Zacks Consensus Estimate for revenues is pegged at $607.03 million.

Non-GAAP earnings from continuing operations are expected between 5 cents and 10 cents per share. The Zacks Consensus Estimate is pegged at 8 cents per share.

The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed it once and matched the same once, with the negative surprise being 2.49%, on average.

Let’s see how things are shaping up for the upcoming announcement.

NortonLifeLock Price and EPS Surprise

Symantec Corporation Price and EPS Surprise

NortonLifeLock price-eps-surprise | NortonLifeLock Quote

Factors at Play

For the third quarter of fiscal 2020, NortonLifeLock expects the second consecutive quarter of year over year growth. This follows a period of no growth or year over year decline in the third and fourth quarters of fiscal 2019 as well as the first quarter of fiscal 2020. Management expects low-single-digit bookings growth.

Moreover, the company is expected to have expanded its Norton 360 memberships to more countries in EMEA, Asia Pacific and Latin American regions to offer a broader range of cyber safety products.

However, a huge increase in stranded costs is expected to have kept margins under pressure during the fiscal third quarter.

Further, the company’s plan to invest in direct marketing to stabilize its customer count is likely to have resulted in higher expenses during the quarter under review.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for NortonLifeLock 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 beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

NortonLifeLock has an Earnings ESP of -12.50% and a Zacks Rank #3.

Stocks to Consider

Here are a few stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season:

CDW Corporation CDW has an Earnings ESP of +2.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palo Alto Networks PANW has an Earnings ESP of +1.18% and a Zacks Rank #3.

America Movil AMX has an Earnings ESP of +7.69% and a Zacks Rank of 3.

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