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Can Acxiom (ACXM) Beat Earnings on Strategic Initiatives?

Leading analytics and software-as-a-service provider Acxiom Corporation ACXM is scheduled to report fourth-quarter fiscal 2016 results after the market closes on May 17. In the last reported quarter, the compny's adjusted earnings beat the Zacks Consensus Estimate by a couple of cents. The company has managed to beat earnings estimates twice in the trailing four quarters for an average earnings surprise of -7.90%. Let’s see how things are shaping up for this announcement.



Key Factors in the Fourth Quarter    

Acxiom is currently focusing on its core competency areas by expanding its businesses across key regions to boost long-term margins. Additionally, the company’s newly-introduced customized product range is highly successful among its clients. The company is striving to improve the functionality and activity of Audience Operating System (AOS) by creating an industry solution that enables one-to-one marketing and scale across all channels and devices. The efforts are concentrated on accelerating top-line growth for both AOS and the core marketing database business while continuing to invest in product enhancement and connectivity.

The company has formed a strategic alliance with social media firm Twitter, Inc. to facilitate advertisers to gauge the efficacy of advertising campaigns on offline sales. The research, intends to analyze exposure and client sales data to determine audience delivery (advertising reach), audience response (conversion rates), and campaign lift (sales increase). A detailed analysis report and key insights from the study will be provided thereafter to advertisers to help them understand the effectiveness of their campaigns. Such focused initiatives are likely to augment revenues in the long run.

Acxiom is also continuing to reposition its portfolio by divesting assets that no longer fit its corporate strategy and focus on other attractive markets. At the same time, Acxiom is implementing a new data structure, which tracks revenues and costs by product categories to simplify workflow, improve accountability and transparency.

The company is on track to restructure its datacenter and network infrastructure to support real-time scalable and cost-efficient business operations, while improving upon security capabilities. This multi-year effort is expected to realize benefits in the near future.

Earnings Whispers

Our proven model does not conclusively show that Acxiom will beat earnings estimate in 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: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: Acxiom’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with Zacks Ranks #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

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

Agilent Technologies, Inc. A, with an Earnings ESP of +2.56% and a Zacks Rank #2.

DSW Inc. DSW, with an Earnings ESP of +2.17% and a Zacks Rank #3.

PVH Corp. PVH, with an Earnings ESP of +1.40% and a Zacks Rank #3.

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ACXIOM CORP (ACXM): Free Stock Analysis Report
 
DSW INC CL-A (DSW): Free Stock Analysis Report
 
PVH CORP (PVH): Free Stock Analysis Report
 
AGILENT TECH (A): Free Stock Analysis Report
 
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