Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Tech Stock Earnings Coming Up on Jul 27: FTV, MTD & More

With the Q2 earnings cycle in full swing, a number of tech companies are slated to report their quarterly numbers over the next few days. So far, the earnings scenario for the overall sector has been pretty impressive.

Per the latest Earnings Outlook, 37% of the sector’s market cap in the S&P 500 index has already reported, as of Jul 25. According to the article, approximately 90.9% of the companies delivered positive earnings surprises, while 81.8% beat top-line expectations. Earnings of these companies are up 13.2% from the same period last year, while revenues increased 11.1%.

Technology is one of the three sectors contributing significantly to second-quarter earnings. The other two are Finance and Energy. Technology giants such as Facebook FB and Amazon AMZN are scheduled to report quarterly numbers this week.

We note that the technology sector has been a strong performer on a year-to-date basis. The sector is benefiting from increasing demand for cloud-based platforms, growing adoption of Artificial Intelligence (AI) solutions, Augmented/Virtual reality devices, autonomous cars, advanced driver assisted systems (ADAS) and Internet of Things (IoT) related software.

However, this does not ensure earnings beat for all companies in the space. It should be noted that a company’s earnings outperformance is dependent on the overall business environment as well as on management’s ability to implement operating and strategic plans.

In other words, a company may perform dismally despite a favorable business environment if it fails to capitalize on the opportunities due to lack of execution.

Let’s see what’s in store for these tech stocks, all of which are expected to release quarterly numbers on Jul 27.

Fortive Corporation FTV is likely to beat second-quarter 2017 expectations as it has a favorable combination of a Zacks Rank #2 (Buy) and an Earnings ESP of +2.9%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This is because, as per our proven model, a company needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or at least 3 (Hold) to deliver an earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

The Zacks Consensus Estimate for the quarter is pegged at 69 cents. Last quarter, the company delivered a positive earnings surprise of 5.3%. Notably, Fortive outperformed the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 5.9%. Shares of Fortive have gained 17.6% year to date, underperforming the industry’s 29.5% rally. (Read more: Fortive Likely to Deliver a Surprise in Q2 Earnings)

Mettler-Toledo International, Inc. MTD is also likely to beat second-quarter 2017 expectations as it has an Earnings ESP of +0.77% and a Zacks Rank #2. The Zacks Consensus Estimate for the quarter is pegged at $3.89. Last quarter, the company came up with a positive earnings surprise of 8.4%. Notably, Mettler-Toledo International has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 5.3%. Mettler-Toledo International stock has gained 43.5% year to date, substantially outperforming the 31.8% rally of the industry it belongs to.

However, KLA-Tencor Corporation KLAC does not seem poised to beat fourth-quarter fiscal 2017 expectations as it has an Earnings ESP of 0.00% and Zacks Rank #2. The Zacks Consensus Estimate for the quarter is pegged at $1.59. Last quarter, the company pulled off a positive earnings surprise of 5.2%. Notably, KLA-Tencor has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 11.6%. KLA-Tencor stock has gained 26% year to date, substantially underperforming the 40.9% rally of the industry it belongs to. (Read more: KLA-Tencor Q4 Earnings: Is a Surprise in the Cards?)

Twitter Inc. TWTR is also not likely to beat second-quarter 2017 estimates as it has an Earnings ESP of 0.00% and Zacks Rank #1. The Zacks Consensus Estimate for the quarter is pegged at a loss of 12 cents. Last quarter, the company came up with a positive earnings surprise of 68.8%. Notably, Twitter has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 50.4%. Twitter stock has gained 22.5% year to date, outperforming the 19.3% rally of the industry it belongs to. (Read more: Twitter to Report Q2 Earnings: A Surprise in Store?)

Similarly, VeriSign Inc. VRSN is unlikely to surpass second-quarter 2017 expectations as it has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 91 cents. Last quarter, the company’s earnings were in line with the Zacks Consensus Estimate.  Shares of VeriSign have gained 32.7% year to date, underperforming the industry’s 36.8% rally. (Read more: What's in the Cards for VeriSign in Q2 Earnings?)

Even Western Digital Corporation WDC seems unlikely to beat fourth-quarter fiscal 2017 expectations. Although, the stock has a +1.99% Earnings ESP, it carries a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the quarter is pegged at $2.51. Last quarter, the company delivered a positive surprise of 11.9%. Notably, Western Digital has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 13.5%. Western Digital has gained 38% year to date, outperforming the 18.5% rally of the industry it belongs to. (Read more: What's in Store for Western Digital in Q4 Earnings?)

Tech giant, Intel Corporation’s INTC second-quarter 2017 results are likely to disappoint. The stock has a Zacks Rank #4 and -1.47% Earnings ESP. The Zacks Consensus Estimate for the quarter is pegged at 68 cents. Last quarter, the company came up with a positive earnings surprise of 1.5%. Notably, Intel has outperformed the Zacks Consensus Estimate in the trailing four quarters, witnessing an average positive surprise of approximately 7%. Shares of Intel have lost 4.4% year to date, compared with the industry’s 13.8% gain. (Read more: Intel to Post Q2 Earnings: Disappointment in Cards?)

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


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
 
Western Digital Corporation (WDC): Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
Twitter, Inc. (TWTR): Free Stock Analysis Report
 
VeriSign, Inc. (VRSN): Free Stock Analysis Report
 
Mettler-Toledo International, Inc. (MTD): Free Stock Analysis Report
 
Intel Corporation (INTC): Free Stock Analysis Report
 
KLA-Tencor Corporation (KLAC): Free Stock Analysis Report
 
Fortive Corporation (FTV): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research