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Teradata (TDC) to Report Q1 Earnings: Will It Miss Again?

Teradata Corp. TDC is set to report first-quarter 2016 results on May 5. Last quarter, the company posted a 3.08% negative earnings surprise. The company has posted an average negative earnings surprise of 13.87% over the past four quarters.

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

Factors to Consider

Since the past few quarters, Teradata’s business has been impacted by unfavorable customer purchase patterns. The recent realignment of its sales force in the U.S. may further make things difficult for the company.  In the first quarter, the company is also expected to exit from most of its Marketing Applications business, resulting in an after-tax loss of 7 million.

In addition, a sluggish spending environment in the domestic market and increasing competition from peers like EMC Corp., Oracle ORCL and IBM Corporation IBM also remain concerns.

Nonetheless, the company can benefit from the robust growth in data warehousing market given its decent product portfolio, customer wins, strategic partnerships and accretive acquisitions. Another positive for the company is its cloud version for Amazon Web Services which can be an important contributor for the top line. In addition, the company’s sales can also get some respite owing to a stabilizing currency market.

Earnings Whispers

Our proven model does not conclusively show that Teradata is likely to beat earnings 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. That is not the case here, as you will see below.

Zacks ESP: Teradata currently has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 31 cents.

Zacks Rank: Teradata currently has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

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 is a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:

Enable Midstream Partners, LP ENBL has an Earnings ESP of +21.05% and a Zacks Rank #2.

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TERADATA CORP (TDC): Free Stock Analysis Report
 
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