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Will Q1 Earnings Hold a Surprise for Nielsen (NLSN) Stock?

Nielsen Holdings N.V. NLSN is set to report first-quarter 2016 results on Apr 20. Last quarter, the company posted a positive earnings surpriseof 5.26%. Moreover, Nielsen surpassed the Zacks Consensus Estimate in the last four quarters, with an average surprise of 2.95%.

Let’s see how things are shaping up for this announcement.

Factors at play

Nielsen is an information and measurement company which offers media and marketing information about what consumers watch and buy on a global and local basis. The company reported strong fourth-quarter results with both earnings and revenues exceeding the Zacks Consensus Estimate. However, revenues were down 0.6% year over year due to foreign currency impact.

The regular dividend payment and the share repurchase program reflect Nielsen’s financial strength and commitment to return value to shareholders. Also, the company's new products are doing well and should drive revenues going ahead.

However, continued investments in technology and infrastructure could weigh on margins and profitability in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Nielsen 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 47 cents. Therefore, the Earnings ESP for Nielsen is 0.00%.

Zacks Rank: Nielsenhas a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, 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.

Stock to Consider

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

Canadian Pacific Railway Limited CP, with an Earnings ESP of +1.10% and a Zacks Rank #1.

Align Technology Inc. ALGN, with an Earnings ESP of +12.82% and a Zacks Rank #1.

Barracuda Networks, Inc. CUDA, with an Earnings ESP of +200.0% and a Zacks Rank #1.

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CDN PAC RLWY (CP): Free Stock Analysis Report
 
NIELSEN HOLDNGS (NLSN): Free Stock Analysis Report
 
ALIGN TECH INC (ALGN): Free Stock Analysis Report
 
BARRACUDA NTWRK (CUDA): Free Stock Analysis Report
 
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