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Technology Stocks' Earnings on Feb 28: CRM, PANW & More
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We are now at the tail end of the fourth-quarter earnings season with 411 S&P 500 members, representing 82.2% of the index’s total market capitalization, having already reported their results.
As of Feb 17, total earnings of these companies were up 8% on a year-over-year basis (68.9% of the companies beat earnings estimates) while total revenue was up 4.9% on a year-over-year basis (54.7% of the companies beat top-line estimates).
Notably, earnings and revenue numbers are better than the recent quarters and growth looks poised to reach its highest level in the last two years. Also, total earnings are poised to reach a new quarterly record. However, positive earnings surprises are tracking low at this stage compared to the past.
As per our latest Earnings Preview report, overall fourth-quarter earnings for S&P 500 companies are anticipated to be up 7.4% from the year-ago quarter on revenues that are estimated to increase 3.9%.
As far as the technology sector is concerned, 94.1% of the sector’s total market cap has already reported results with 74.1% beating estimates on the bottom line and 74.1% posting revenue beats.
Here we take a look at four technology companies that are set to report their quarterly earnings on Feb 28:
salesforce.com, inc. (CRM - Free Report) is unlikely to beat fourth-quarter fiscal 2017 estimates as it has an unfavorable combination of a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00%.
This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) to beat earnings. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
During the last quarter, Salesforce witnessed significant year-over-year growth in both the top and the bottom line. The improvement was primarily attributed to the rapid adoption of the company’s cloud-based solutions. Also, higher demand for Salesforce ExactTarget Marketing Cloud platform, part of the Salesforce1 Customer Platform, contributed to the improvement. We expect the trend to continue in the fourth quarter as well.
A higher number of deal wins and geographical contributions should also boost results in the soon-to-be-reported quarter. Overall, the company’s diverse cloud offerings and considerable spending on digital marketing remain growth catalysts. Moreover, strategic acquisitions and resultant synergies are expected to drive fourth-quarter results. (Read More: Salesforce (CRM - Free Report) to Report Q4 Earnings: What's in Store?)
We note that salesforce’s results compared favorably with the Zacks Consensus Estimate in only one of the last four quarters, resulting in an average negative surprise of 8.75%.
Shares of salesforce have underperformed the Zacks Computer - Software industry over the last one year. While the industry gained 27.4%, the stock returned 20.7%.
Similarly, Palo Alto Networks, Inc. (PANW - Free Report) looks unlikely to beat earnings estimates for the second-quarter of fiscal 2017 as it has an unfavorable combination of a Zacks Rank #1 and an Earnings ESP of 0.00%.
Palo Alto Networks allows firms, service providers and government bodies to impose tighter security measures through its network security platform. The company reported wider-than-expected loss in the first quarter. Revenues also missed the Zacks Consensus Estimate.
Nonetheless, revenue growth seems to be steady, aided by strength across all its geographical regions and business segments. Also, customer wins coupled with expansion of the existing customer base are the other positives. We believe that the company’s product refreshes will boost revenues. (Read More: Is a Surprise in Store for Palo Alto (PANW - Free Report) in Q2 Earnings?)
Notably, Palo Alto’s results have missed the Zacks Consensus Estimate in each of the preceding four quarters with an average negative surprise of 187.36%.
Also, shares of Palo Alto have underperformed the Zacks Computers - IT Services industry over the last one year. While the industry gained 21.1%, the stock gained only 5.6%.
It operates as a provider of industry-specific, cloud-based software solutions for the life sciences industry.
Veeva’s industry-specific focus gives it significant leverage, in our view. The company’s knowledge on the different components of the life sciences industry is helping it to build targeted products. Notably, products like Veeva OpenData provide customer data to all healthcare professionals (HCP), healthcare organizations (HCO) and affiliations across life sciences’ major markets.
Moreover, new launches at the Veeva Vault and the Veeva Commercial Cloud platforms are encouraging. The company is also supported by considerable strength in its CRM platform.
However, foreign currency risks and a competitive landscape remain concerns for the company in the soon-to-be reported quarter.
Notably, Veeva Systems’s results have beaten the Zacks Consensus Estimate in each of the preceding four quarters resulting in an average positive surprise of 47.77%.
Shares of Veeva Systems have outperformed the Zacks Internet - Software industry over the last one year. While the industry gained 14.7%, the stock appreciated 81.9%.
Last but not the least, LogMeIn, Inc. too is unlikely to beat estimates for fourth-quarter fiscal 2017, as it has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.
LogMeIn is a leading provider of on-demand, remote-connectivity and support solutions to small businesses, IT service providers and consumers.
The company announced the merger with Citrix’s Go To business which was completed recently. This trend of de-emphasizing the smaller, non-core products and combining them with one another will likely create cost synergies for LogMeIn that remains a positive development for the soon-to-reported quarter’s results.
However, a competitive landscape in the personal cloud space remains a concern for the company.
Notably, LogMeIn’s results have beaten the Zacks Consensus Estimate in each of the preceding four quarters resulting in an average positive surprise of 49.73%.
Also, shares of LogMeIn have outperformed the Zacks Computer – Services industry over the last one year. While the industry gained 29.4%, the stock appreciated a significant 82.7%.
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Technology Stocks' Earnings on Feb 28: CRM, PANW & More
We are now at the tail end of the fourth-quarter earnings season with 411 S&P 500 members, representing 82.2% of the index’s total market capitalization, having already reported their results.
As of Feb 17, total earnings of these companies were up 8% on a year-over-year basis (68.9% of the companies beat earnings estimates) while total revenue was up 4.9% on a year-over-year basis (54.7% of the companies beat top-line estimates).
Notably, earnings and revenue numbers are better than the recent quarters and growth looks poised to reach its highest level in the last two years. Also, total earnings are poised to reach a new quarterly record. However, positive earnings surprises are tracking low at this stage compared to the past.
As per our latest Earnings Preview report, overall fourth-quarter earnings for S&P 500 companies are anticipated to be up 7.4% from the year-ago quarter on revenues that are estimated to increase 3.9%.
As far as the technology sector is concerned, 94.1% of the sector’s total market cap has already reported results with 74.1% beating estimates on the bottom line and 74.1% posting revenue beats.
Here we take a look at four technology companies that are set to report their quarterly earnings on Feb 28:
Salesforce.com Inc Price and EPS Surprise
Salesforce.com Inc Price and EPS Surprise | Salesforce.com Inc Quote
salesforce.com, inc. (CRM - Free Report) is unlikely to beat fourth-quarter fiscal 2017 estimates as it has an unfavorable combination of a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00%.
This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) to beat earnings. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
During the last quarter, Salesforce witnessed significant year-over-year growth in both the top and the bottom line. The improvement was primarily attributed to the rapid adoption of the company’s cloud-based solutions. Also, higher demand for Salesforce ExactTarget Marketing Cloud platform, part of the Salesforce1 Customer Platform, contributed to the improvement. We expect the trend to continue in the fourth quarter as well.
A higher number of deal wins and geographical contributions should also boost results in the soon-to-be-reported quarter. Overall, the company’s diverse cloud offerings and considerable spending on digital marketing remain growth catalysts. Moreover, strategic acquisitions and resultant synergies are expected to drive fourth-quarter results. (Read More: Salesforce (CRM - Free Report) to Report Q4 Earnings: What's in Store?)
We note that salesforce’s results compared favorably with the Zacks Consensus Estimate in only one of the last four quarters, resulting in an average negative surprise of 8.75%.
Shares of salesforce have underperformed the Zacks Computer - Software industry over the last one year. While the industry gained 27.4%, the stock returned 20.7%.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. Price and EPS Surprise | Palo Alto Networks, Inc. Quote
Similarly, Palo Alto Networks, Inc. (PANW - Free Report) looks unlikely to beat earnings estimates for the second-quarter of fiscal 2017 as it has an unfavorable combination of a Zacks Rank #1 and an Earnings ESP of 0.00%.
Palo Alto Networks allows firms, service providers and government bodies to impose tighter security measures through its network security platform. The company reported wider-than-expected loss in the first quarter. Revenues also missed the Zacks Consensus Estimate.
Nonetheless, revenue growth seems to be steady, aided by strength across all its geographical regions and business segments. Also, customer wins coupled with expansion of the existing customer base are the other positives. We believe that the company’s product refreshes will boost revenues. (Read More: Is a Surprise in Store for Palo Alto (PANW - Free Report) in Q2 Earnings?)
Notably, Palo Alto’s results have missed the Zacks Consensus Estimate in each of the preceding four quarters with an average negative surprise of 187.36%.
Also, shares of Palo Alto have underperformed the Zacks Computers - IT Services industry over the last one year. While the industry gained 21.1%, the stock gained only 5.6%.
Veeva Systems Inc. Price and EPS Surprise
Veeva Systems Inc. Price and EPS Surprise | Veeva Systems Inc. Quote
Veeva Systems Inc. (VEEV - Free Report) too is unlikely to beat estimates for fourth-quarter fiscal 2017, as it has an unfavorable combination of an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
It operates as a provider of industry-specific, cloud-based software solutions for the life sciences industry.
Veeva’s industry-specific focus gives it significant leverage, in our view. The company’s knowledge on the different components of the life sciences industry is helping it to build targeted products. Notably, products like Veeva OpenData provide customer data to all healthcare professionals (HCP), healthcare organizations (HCO) and affiliations across life sciences’ major markets.
Moreover, new launches at the Veeva Vault and the Veeva Commercial Cloud platforms are encouraging. The company is also supported by considerable strength in its CRM platform.
However, foreign currency risks and a competitive landscape remain concerns for the company in the soon-to-be reported quarter.
Notably, Veeva Systems’s results have beaten the Zacks Consensus Estimate in each of the preceding four quarters resulting in an average positive surprise of 47.77%.
Shares of Veeva Systems have outperformed the Zacks Internet - Software industry over the last one year. While the industry gained 14.7%, the stock appreciated 81.9%.
LogMein, Inc. Price and EPS Surprise
LogMein, Inc. Price and EPS Surprise | LogMein, Inc. Quote
Last but not the least, LogMeIn, Inc. too is unlikely to beat estimates for fourth-quarter fiscal 2017, as it has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.
LogMeIn is a leading provider of on-demand, remote-connectivity and support solutions to small businesses, IT service providers and consumers.
The company announced the merger with Citrix’s Go To business which was completed recently. This trend of de-emphasizing the smaller, non-core products and combining them with one another will likely create cost synergies for LogMeIn that remains a positive development for the soon-to-reported quarter’s results.
However, a competitive landscape in the personal cloud space remains a concern for the company.
Notably, LogMeIn’s results have beaten the Zacks Consensus Estimate in each of the preceding four quarters resulting in an average positive surprise of 49.73%.
Also, shares of LogMeIn have outperformed the Zacks Computer – Services industry over the last one year. While the industry gained 29.4%, the stock appreciated a significant 82.7%.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>