Software Stocks Earnings on Nov 1: PCTY, RP, MSCI & SYMC
Software has become the focal point of technological innovation. The last few years have witnessed a series of breakthroughs in cloud computing, predictive analysis, artificial intelligence (AI), self-driving vehicles, digital personal assistants and Internet of Things (IoT), consequently setting the stage for strong growth in the software industry.
Moreover, continued enterprise investment in big data and analytics along with the ongoing adoption of Software-as-a-Service (SaaS) presents significant growth opportunity.
Additionally, the increasing need to secure cloud platforms, amid growing incidences of cyber-attacks and hacking, drives demand for cyber security software.
Further, as enterprises continue to move their on-premise workload to cloud environments (emergence of hybrid cloud), application and infrastructure monitoring have gained utmost importance. This is increasing demand for performance management monitoring tools that are not only scalable but also suitable for cloud-based environments.
Notably, software providers are adjusting their business model to keep up with changing requirements of clients. Subscription and term-licence based revenue pricing models have become extremely popular and these are replacing the legacy upfront payment model. Although top-line growth of these companies is expected to benefit from increased revenue visibility and higher recurring revenues in the long haul, the transition remains on overhang in the near term.
It should also be noted that a company’s earnings outperformance is dependent on the overall business environment as well as management’s ability to implement operating and strategic plans. Therefore, earnings beat for all companies in the space is not ensured.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or #5 (Strong Sell) are best avoided.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s see what’s in store for the following four software stocks slated to report on Nov 1.
Paylocity Holding Corporation PCTY provides cloud-based payroll and human capital management software solutions for medium-sized organizations. The company is likely to beat third-quarter 2018 expectations as it has a favorable combination of a Zacks Rank #3 and an Earnings ESP of +9.59%.
The results are likely to benefit from increased client transition from traditional payroll services to the company's SaaS-based services. Notably, the company’s strong product portfolio is resulting in new client additions.
The company beat the Zack Consensus Estimate in three of the trailing four quarters, delivering an average positive earnings surprise of 18%.
Paylocity Holding Corporation Price and EPS Surprise
Paylocity Holding Corporation Price and EPS Surprise | Paylocity Holding Corporation Quote
RealPage, Inc. RP is a provider of on-demand property management solutions. The company’s third-quarter results are likely to be driven by organic revenue growth acceleration as well as acquisitions, which boosted its product portfolio.
The company beat the Zacks Consensus Estimate once in the trailing four quarters and matched it twice, delivering an average positive surprise of 1.12%.
However, the company currently has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult
RealPage, Inc. Price and EPS Surprise
RealPage, Inc. Price and EPS Surprise | RealPage, Inc. Quote
MSCI Inc. MSCI, a provider of investment decision support tools, beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 5.8%.
We believe the company’s third-quarter results are likely to benefit from higher asset-based fees and solid growth in recurring subscriptions. (Read more: Will MSCI Q3 Earnings Gain from Higher Asset-Based Fees?)
However, the company has a Zacks Rank #4 and Earnings ESP of -0.77%.
MSCI Inc Price and EPS Surprise
MSCI Inc Price and EPS Surprise | MSCI Inc Quote
Symantec Corporation SYMC isa provider of a broad range of solutions for content security and information backup to individuals and enterprises. The company’s fiscal second-quarter 2019 results are likely to benefit from rising demand for cybersecurity products. Notably, the company beat estimates thrice in the trailing four quarters, delivering an average positive surprise of 5.60%.
However, it has a Zacks Rank #4 and Earnings ESP of -0.20%. Weakness in Enterprise Security segment and intensifying competition are concerns. (Read more: Symantec to Report Q2 Earnings: What's in the Offing?)
Symantec Corporation Price and EPS Surprise
Symantec Corporation Price and EPS Surprise | Symantec Corporation Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
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