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Will Likely Q1 Earnings Beat Drive GoDaddy (GDDY) Stock?

We expect GoDaddy Inc. GDDY to beat expectations when it reports first-quarter 2016 results on May 4.Whether a likely beat drives the company’s share price will be interesting to watch.

Why a Likely Positive Surprise?

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

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +33.33%. This is a meaningful  indicator of a likely positive earnings surprise.

Zacks Rank: GoDaddyhas a Zacks Rank #3 (Hold).

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement. 

The combination of GoDaddy’s Zacks Rank #3 and +33.33% ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-than-Expected Earnings?

GoDaddy is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals and individuals. GoDaddy’s strong market position, increasing investments in products, technology platform and customer care should boost first-quarter results. We also expect its focus on delivering innovative and increasingly personalized products and services globally to bear fruit.

Also, the company is striving to expand internationally (reportedly China, Japan, Singapore and Korea) by investing in technology, marketing programs and customer care teams. Growing international presence and the shift toward dynamic online presence for small business will likely play an important role going forward. Moreover, with product development and more effective ads, the company is trying to establish itself as a serious player.

However, significant competition, heavy debt burden and controversies surrounding the company could pose challenges.

Other Stocks to Consider

GoDaddyis not the only firm looking up this earnings season. We also see likely earnings beat for the following companies:

DHT Holdings, Inc. DHT, with an Earnings ESP of +8.11% and a Zacks Rank #1. The company is slated to report first-quarter 2016 earnings results on May 3.

Quotient Technology Inc. QUOT, with an Earnings ESP of +18.18% and a Zacks Rank #1. The company is slated to report first-quarter 2016 earnings results on May 3.

Silver Bay Realty Trust Corp. SBY, with an Earnings ESP of +5.00% and a Zacks Rank #1. The company is slated to report fourth-quarter fiscal 2016 earnings results on May 4.

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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
 
DHT HOLDINGS (DHT): Free Stock Analysis Report
 
SILVER BAY RLTY (SBY): Free Stock Analysis Report
 
QUOTIENT TECH (QUOT): Free Stock Analysis Report
 
GODADDY INC-A (GDDY): Free Stock Analysis Report
 
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