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Why the Earnings Streak Will Continue for Splunk (SPLK)

Zacks

Looking for a stock that might be in a good position to beat earnings at its next report? Consider Splunk Inc. SPLK, a firm in the Internet – Software industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, SPLK has beaten estimates by at least 30% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, SPLK was expected to post a loss of 5 cents per share, while it actually produced loss of a penny per share, a beat of 80%. Meanwhile, for the most recent quarter, the company looked to deliver 6 cents per share, when it actually saw 8 cents per share instead, representing a 33.3% positive surprise.

Splunk Inc. Price and EPS Surprise

Splunk Inc. Price and EPS Surprise | Splunk Inc. Quote


Thanks in part to this history, recent estimates have been moving higher for Splunk. In fact, the Earnings ESP for SPLK is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for SPLK, as the firm currently has a Zacks Earnings ESP of 0.42%, so another beat could be around the corner.

This is particularly true when you consider that SPLK has a great Zacks Rank #2 (Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that SPLK could see another beat at its next report, especially if recent trends are any guide.

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