Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

What's in the Cards for Model N (MODN) in Q2 Earnings?

Model N, Inc. MODN is scheduled to report second-quarter fiscal 2016 results on May 9. Last quarter, the company posted a positive earnings surprise of 7.1%. Let's see how things are shaping up for this announcement.

Factors to Consider

Model N provides revenue management solutions for the life science and technology industries. It develops applications such as managed care and government pricing for life science companies and channel incentives based on design wins for technology companies.

The company reported strong year-over-year growth in revenues (up 10.8%) in the first quarter of fiscal 2016. Reported revenues matched the Zacks Consensus Estimate. Coming to the bottom line, although the company posted a loss of 2 cents for the quarter, it compared favorably with the Zacks Consensus Estimate of a loss of 28 cents.

We are optimistic about the company’s strategic acquisitions, product launches and deal wins, which should positively impact second quarter results. However, the pricing pressure caused by stiff competition from SAP SE SAP, I-Many Inc. and Symphony Teleca Corp. may impact profitability in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Model N is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Model N is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss per share of 36 cents.

Zacks Rank: Model N currently has a Zacks Rank #3 which when combined with 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some stocks that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Synopsys Inc. SNPS, with an Earnings ESP of +6.38% and a Zacks Rank #1

Agilent Technologies, Inc. A, with an Earnings ESP of +2.56% and a Zacks Rank #3

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 >>


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
 
SYNOPSYS INC (SNPS): Free Stock Analysis Report
 
SAP AG ADR (SAP): Free Stock Analysis Report
 
AGILENT TECH (A): Free Stock Analysis Report
 
MODEL N INC (MODN): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research