Will Ubiquiti Networks (UBNT) Beat Earnings This Quarter? - Analyst Blog

Ubiquiti Networks, Inc. UBNT is expected to report its third quarter fiscal 2014 results after the market closes on May 8. It had delivered a +6.8% earnings surprise in the preceding quarter. Let's see how things are shaping up prior to this announcement.

Factors to Consider

Ubiquiti Networks primarily develops high performance networking technology for its service providers. The company's technology platforms essentially focus on delivering highly advanced and easily deployable solutions that appeal to a broad customer base in underserved and underpenetrated markets. The company's differentiated business model has enabled it to counter traditional barriers such as high product and network deployment costs by offering solutions with disruptive price-performance characteristics.

Further, the company offers a broad portfolio of networking products and solutions for service providers. Ubiquiti's service provider segment offers carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing, while its enterprise product segment provides wireless LAN infrastructure, video surveillance products and machine-to-machine communication components. The company's products are well differentiated owing to its proprietary software protocol innovation, firmware expertise and hardware design capabilities.

Earnings Whispers?

There have been no estimate revisions in the last 30 and 60 days. As a result, the Zacks Consensus Estimate for the current quarter as well as for 2014 has remained unchanged over the same time frame.

However, our proven model does not conclusively show that Ubiquiti 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 to be able to beat consensus estimates. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and Zacks Consensus Estimate currently stand at 48 cents.

Zacks Rank #3 (Hold): Ubiquiti Networks holds a Zacks Rank #3 (Hold). 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 Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

• InterDigital Inc. IDCC has an Earnings ESP of +100% and holds a Zacks Rank #2 (Buy)
• Juniper Networks Inc. JNPR has an Earnings ESP of +3.70% and carries a Zacks Rank #2 (Buy)
• Intuit Inc. INTU has an Earnings ESP of +1.18% and holds a Zacks Rank #2 (Buy)