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What's in Store for Teradata (TDC) This Earnings Season?

Teradata Corp. TDC is slated to report second-quarter 2017 results on Jul 27 before the opening bell. Last quarter, the company posted a positive earnings surprise of 5.26%. Additionally, it has an average positive earnings surprise of 14.96% in the trailing four quarters.

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

Factors to Consider

Teradata is well positioned in Enterprise Data Warehousing (EDW) solutions market, including enterprise analytic technologies and services worldwide. Further, the company offers a robust product portfolio.

We expect the company’s ongoing transition – especially with regards to new subscription pricing programs – to be long-term growth drivers but will continue to impact results in the near term.

Also, we believe that restructuring related costs and a sluggish spending environment in the domestic market will continue to weigh on the near term performance. Stiffening competition is an added concern.

Teradata has underperformed the industry in the last year. The company’s shares have decreased 2.4% compared with the industry’s gain of 48.1% during the period.

The company's management anticipates second-quarter 2017 revenue to be in the $510–$530 million range. Non-GAAP earnings per share are expected to be in the 25–30 cents range.

Earnings Whispers

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

Zacks ESP: Teradata has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 22 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Teradata carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

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

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Cypress Semiconductor Corp. CY with an Earnings ESP of +11.11% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank Stocks here.

Kemet Corp. KEM with an Earnings ESP of +11.11% and a Zacks Rank #1.

Lam Research Corp. LRCX with an Earnings ESP of +1.33% and a Zacks Rank #1.

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