Can Citrix Systems (CTXS) Keep its Earnings Streak Alive?
Citrix Systems, Inc. (CTXS), a leading provider of virtualization, networking and cloud computing solutions in the U.S., is slated to report its third-quarter 2014 financial numbers on Oct 22, 2014, after the closing bell.
Last quarter, the company posted a positive earnings surprise of 53.66%. Moroever, in all of the past four quarters, the company has outpaced the Zacks Consensus Estimate, with an average positive earnings beat of 25.88%. Let’s see how things are shaping up for this announcement.
Factors to Influence this Quarter
We believe the global trend toward virtualization and cloud computing will facilitate Citrix to retain its momentum in the long term. Moreover, both its XenMobile and XenApps are gaining significant market traction in the highly lucrative enterprise mobility segment and Windows app virtualization space.
In the last reported second quarter of 2014, the company achieved revenue growth in all its segments. Presently, even outside the U.S., it continues to experience strong revenue expansion. As a result, the company expects revenues to increase in the range of $765–$775 million in the third quarter of 2014. Meanwhile, revenue growth for full-year 2014 is estimated at 8.5% to 10%.
Citrix provides software and equipment for streamlining business computer systems. The demand for its products and services depends substantially upon the general demand for business-related computer appliances and software. Fluctuations in the demand for these products and services could have an adverse effect on the company’s business, results of operations and financial condition.
Earnings Whispers?
Our proven model does not conclusively show that Citrix Systems is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Citrix Systems has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 51 cents.
Zacks Rank: Citrix Systems has a Zacks Rank #3 (Hold) which increases the predictive power of ESP; however, when combined with an ESP of 0.00%, it makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions.
Stocks to Consider
Here are some companies in the Business Software & Services industry that investors can consider, as, according to our model, they have the right combination of elements to post an earnings beat this quarter:
AMC Entertainment Holdings, Inc. (AMC), with an earnings ESP of +16.67% and a Zacks Rank #3.
Liberty Interactive Corporation (QVCA), with an earnings ESP of +10.00% and a Zacks Rank #3.
DragonWave Inc. (DRWI), with an earnings ESP of +16.67% and a Zacks Rank #3.
Read the Full Research Report on CTXS
Read the Full Research Report on DRWI
Read the Full Research Report on QVCA
Read the Full Research Report on AMC
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