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What's in Store for AppFolio (APPF) This Earnings Season?

Appfolio Inc. APPF is set to report third-quarter 2017 results on Nov 6.

Last quarter, the company reported earnings of 8 cents, which were well ahead of the Zacks Consensus Estimate of a loss of a penny. The company had reported a loss of 7 cents in the year-ago quarter. Notably, the company has a positive earnings surprise track record.  It has beaten estimates in each of the trailing four quarters, delivering an average positive surprise of 241.67%.

Revenues surged almost 37% to $35.9 million. The figure was also better than the Zacks Consensus Estimate.

The company also raised its 2017 guidance following the impressive second-quarter results. The company now projects revenues in the range of $138—$139 million, up from previous guidance range of $136—$138 million.

Notably, Appfolio shares have gained 90.8% year-to-date substantially outperforming the 29.5% rally of the industry it belongs to.

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

Factors at Play

Appfolio, a provider of cloud-based software solutions for property managers, is gaining from its product and technology based innovations, which are resulting in an enriched customer base. The company’s expanding customer base reached 10,800 property managers and 9,000 legal customers at the end of the second quarter.

Notably, the company upgraded its product suite during the third-quarter with enhancements including the likes of AppFolio Renters Insurance, a new Value+ Service, and same day ACH, an addition to the existing Electronic Payments Value+ Platform. These additions are anticipated to be positives for the company this quarter.

Additionally, the company announced integration with Amazon’s AMZN voice service Alexa that will allow tenants to pay rents or submit other requests using voice commands through AppFolio’s platform. This is another tailwind for the company.

AppFolio, Inc. Price and EPS Surprise

AppFolio, Inc. Price and EPS Surprise | AppFolio, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Appfolio is likely to deliver a positive surprise 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.

This is not the case here as you will see below:

Zacks ESP: Appfolio’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at break even. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Appfolio’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

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

Stocks to Consider

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

Adobe Systems Inc. ADBE has an Earnings ESP of +0.25% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corp. NVDA has an Earnings ESP of +0.71% and carries a Zacks Rank #1.

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