Is NVIDIA Corp. (NVDA) Poised to Beat Earnings Estimates? - Analyst Blog

NVIDIA Corp. NVDA is set to release first-quarter 2015 results on May 8. Last quarter, the company delivered a positive 44.4% earnings surprise. Let's see how things are shaping up for the company prior to the announcement.

Factors to Consider this Past Quarter

In the last reported quarter, NVIDIA witnessed robust demand for its gaming and high-end notebook GPUs. Though bottom line decreased on a year-over-year basis, primarily due to higher-than-expected operating costs, top line improved.

The company is expected to witness significant traction in the Tegra segment due to its Tegra 4 and Tegra K1 shipments. We believe NVIDIA's innovative product pipeline that consists of SHIELD 2 and mobile processor Tegra K1 will boost top-line growth, going forward. The company's partnerships with VMware VMW and GE Intelligent Platforms bode well over the long term.

Nonetheless, continuous decline in PC sales is a cause of concern for the company's GPU segment. Competition from the likes of Intel and QUALCOMM Inc. QCOM and higher operating expenses are also expected to hurt profitability in the near term.

Earnings Whispers?

Our proven model does not conclusively show that NVIDIA 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, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Earnings ESP for NVIDIA is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at 16 cents.

Zacks Rank: NVIDIA's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #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

Intuit Inc. INTU, has an Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).