U.S. Markets open in 4 hrs 14 mins

Splunk (SPLK) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Splunk SPLK is set to report first-quarter fiscal 2020 results on May 23.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 31.8%.

In the last reported quarter, Splunk added more than 600 new enterprise customers. Further, cloud revenues soared 85% year over year to $53 million on the back of increased utilization of cloud-based services.

Splunk’s portfolio strength is helping it win new customers. Solid demand for the company’s enterprise, security and cloud solutions is expected to drive the top line in the soon-to-be-reported quarter.

Splunk’s strong partner base that comprises Amazon Web Services (AWS), Accenture, Cisco and Symantec, among others, has been a key catalyst. Integration of the company’s products in partner solution is expected to boost Splunk’s exposure, particularly among enterprise customers.

Splunk Inc. Price and EPS Surprise

 

Splunk Inc. Price and EPS Surprise

Splunk Inc. price-eps-surprise | Splunk Inc. Quote

Moreover, the company continues its transition to a renewable model (85% of the product mix for 2020), which is a tailwind. However, the transition is expected to negatively impact operating cash flow. Additionally, increasing cloud revenues in the product mix is expected to keep margins under pressure in the to-be-reported quarter.

For the first quarter, Splunk expects revenues of $395 million. The quarter is expected to be negatively impacted by seasonality.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $395.7 million, indicating growth of almost 27% from the figure reported in the year-ago quarter.

Further, the consensus mark for loss is pegged at 15 cents, unchanged over the past 30 days. The estimated loss figure is wider than loss of 7 cents reported in the year-ago quarter.

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. Meanwhile, the Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Splunk has a Zacks Rank #4 and an Earnings ESP of -2.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Verint Systems VRNT has an Earnings ESP of +2.94% and a Zacks Rank #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.

Momo Inc. MOMO has an Earnings ESP of +1.21% and a Zacks Rank #3.

Will you retire a millionaire?

One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”

Click to get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Splunk Inc. (SPLK) : Free Stock Analysis Report
 
Momo Inc. (MOMO) : Free Stock Analysis Report
 
Intuit Inc. (INTU) : Free Stock Analysis Report
 
Verint Systems Inc. (VRNT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research