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What's in Store for MINDBODY (MB) this Earnings Season?

MINDBODY, Inc. MB is set to report first-quarter 2016 results on May 3. Last quarter, the company posted narrower-than-expected loss.

Let us see how things are shaping up for this announcement.

Factors to Consider

MINDBODY develops cloud-based business management software and payments platform for the wellness services industry. The company currently provides its services to 42,000 businesses in over 124 countries worldwide. With such a huge client base, the company is expected to post impressive earnings numbers in the first quarter.

Furthermore, significant investments in growth areas to improve implementation timelines, particularly for web and mobile application products, will boost profitability going forward. In fact, we expect these initiatives to have a favourable impact on the company’s first-quarter earnings as well.

However, continued investments toward enhancing product portfolio may undermine the company’s near-term profitability. Moreover, stiff competition from the likes of Microsoft Corp. MSFT and Oracle is likely to hurt the company’s results in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that MINDBODY is likely to beat estimates 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. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP for MINDBODY is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 25 cents per share.

Zacks Rank: MINDBODY carries a Zacks Rank #3. However, a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are a couple of stocks which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Arrow Electronics Inc. ARW, with an Earnings ESP of +1.42% and a Zacks Rank #2.

Microchip Technology Inc. MCHP has an Earnings ESP of +3.33% and a Zacks Rank #2

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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
MICROSOFT CORP (MSFT): Free Stock Analysis Report
ARROW ELECTRONI (ARW): Free Stock Analysis Report
MICROCHIP TECH (MCHP): Free Stock Analysis Report
MINDBODY INC-A (MB): Free Stock Analysis Report
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