U.S. Markets close in 3 hrs 15 mins

NVIDIA (NVDA) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research
NVIDIA (NVDA) to Report Q1 Earnings: What's in the Cards?


NVIDIA Corporation NVDA is scheduled to report first-quarter fiscal 2020 results on May 16.

In the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate thrice and missed it once, the average positive surprise being 8.17%.

Notably, in the last reported quarter, the company’s non-GAAP earnings per share of 80 cents topped the Zacks Consensus Estimate of 75 cents but tumbled 53% from the year-ago period as well as 57%, sequentially.

Revenues declined 24% year over year and 31% sequentially to $2.21 billion and also lagged the Zacks Consensus Estimate of $2.37 billion.

Estimates and Guidance for Q1

For the first quarter of fiscal 2020, NVIDIA anticipates revenues of $2.20 billion (+/-2%).

The Zacks Consensus Estimate is also currently pegged at $2.20 billion, indicating a drop of almost 31.4% from the year-ago reported figure.

Further, the consensus mark for earnings currently stands at 82 cents, implying a plunge of 60% from the year-earlier reported number.

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote

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

Factors at Play

NVIDIA, which has impressed investors with a stellar performance in the last couple of years, has been witnessing a downward trend since last October. A sharp decline in the Gaming segment is a major overhang on the company.

Notably, following tepid GPU demand from crypto miners, the company’s decision to suspend mid-range Pascal GPU shipments in order to normalize channel inventory levels is hurting its gaming revenues. Management expects revenues to decrease in the quarter under review as channel inventory is likely to be cleared by the end of the period to be reported.

Moreover, deteriorating macro-economic conditions, particularly in China, are inducing soft consumer demand for the GPUs. Further, sluggishness in the datacenter market also makes us apprehensive about the upcoming quarterly results.

However, NVIDIA’s confidence in its strategies and growth opportunities in ray-traced gaming, rendering, high-performance computing, AI and self-driving cars, is something to look forward to.

The company’s Turing GPU and its real-time ray tracing technology are witnessing a massive adoption, which is a positive. Moreover, autonomous vehicle development deals and the growing uptake of AI-based smart cockpit infotainment solutions are likely to drive automotive revenues in the to-be-reported quarter.

What the Model Says

The proven Zacks model conclusively shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has significantly high chances of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

NVIDIA currently has a Zacks Rank #3, which increases the predictive power of ESP. However, its Earnings ESP of 0.00% in the combination makes surprise prediction difficult for the stock this reporting cycle.

Stocks to Consider

Following are a few stocks worth considering from the same space with the right mix of elements to beat estimates this earnings season:

Verint Systems Inc. VRNT has an Earnings ESP of +2.94% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuit INTU has an Earnings ESP of +0.59% and a Zacks Rank #2.

GTT Communications, Inc. GTT has an Earnings ESP of +71.88% and a Zacks Rank of 3.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.