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Will the Earnings Streak Continue for VASCO (VDSI) in Q3?

Leading security software firm VASCO Data Security International Inc. VDSI is set to report third-quarter 2015 results after the market closes on Oct 27. The cybersecurity firm has had an incredible earnings beat history. It reported a 25% positive earnings surprise last quarter, taking the four-quarter average surprise to an astounding 114.3%.

We expect the company to continue its upbeat performance in the third quarter.

Why a Likely Positive Surprise?

Our proven model shows that VASCO is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +13.04%. This is very meaningful and a leading indicator of a likely earnings surprise.

Zacks Rank: VASCO has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of VASCO’s Zacks Rank #3 and +13.04% ESP makes us confident in looking for an earnings beat on Oct 27.

What's Driving the Better-Than-Expected Earnings?

VASCO’s earnings have been consistently beating the Zacks Consensus Estimate by a huge margin, thanks to...