Is MICROS Systems (MCRS) Poised to Beat Earnings? - Analyst Blog

MICROS Systems Inc. MCRS is set to report third-quarter fiscal 2014 results on May 1. Last quarter, the company posted a negative earnings surprise of 1.69%. Let us see how things are shaping up for this announcement.

Growth Factors This Past Quarter

MICROS reported mixed second-quarter fiscal 2014 results with the top line beating the Zacks Consensus Estimate and the bottom line missing the same. Revenues increased year over year, primarily attributable to improving macro conditions across all business segments.

Moreover, recent collaborations with companies like Microsoft MSFT, Dell and Intel INTC are expected to boost MICROS' hardware business going forward. Also, rapid adoption of MICROS' solutions will increase its top line. Expansion of the company's SaaS capabilities and increase in licensed software sales should also support revenues.

On the flip side, the company is facing competition from the likes of Square, Revel, Groupon Inc. GRPN and NCR Corp. NCR, which provide mobile and tablet-based offerings for the hospitality sector and cannibalize the legacy point of sale (POS) workstations.

Moreover, the company's European exposure and a sluggish macro-economic environment are the other headwinds, going forward.

Earnings Whispers?

Our proven model does not conclusively show that MICROS will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 61 cents. Hence, the difference is 0.00%.

Zacks Rank: MICROS' Zacks Rank #2 (Buy) when combined with a 0.00% ESP makes surprise prediction difficult.

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

Other Stocks to Consider

Here is another company you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

ON Semiconductor Corp. ONNN has an Earnings ESP of +6.67% and holds a Zacks Rank #1 (Strong Buy).