Will GoPro Inc.'s (GPRO) Earnings Surprise This Season?

GoPro, Inc. GPRO is scheduled to release second-quarter 2014 results on Jul 31 after markets close. Let us see how things are shaping up for this announcement.

Factors to Impact Q2 Results

GoPro is a portable video camera maker offering cameras that can be attached to moving objects or even people. These cameras are specially used by sportsmen or sky divers to capture intricate details of a sporting episode.

GoPro has significant market potential in the portable camera industry. Furthermore, the company expects to generate strong revenues at its Media division. According to its latest filing, GoPro's videos have fetched 50 million hours of viewership in 2013. This can be further monetized to generate revenues to compensate for any deterioration in camera sales hurt by growing competition or other factors.

In addition, GoPro enjoys a first mover's advantage in the high definition portable camera market and its extensive portfolio of cameras is believed to help it counter intensifying competition from new entrants.

However, the company faces stiff competition in the wearable camera segment from large firms like Apple (APPL) and Google GOOG. This apart, integration of portable cameras into smartphones is expected to pose another major headwind for the company going forward.

Earnings Whispers

Our proven model does not conclusively show that GoPro is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, #2 or #3 for this to happen. Unfortunately, this is not the case here as you can see below.

Zacks ESP: The Earnings ESP for GoPro is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at -12 cents.

 Zacks Rank: GoPro carries a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

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

Stocks That Warrant a Look

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Silicon Motion Technology Corp SIMO with an Earnings ESP of +12.90% and a Zacks Rank #1 (Strong Buy).

Fluor Corp. FLR, with an Earnings ESP of +3.06% and a Zacks Rank #2 (Buy).

The Andersons, Inc. ANDE with an Earnings ESP of +6.09% and Zacks Rank #2.

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GOPRO INC-A GPRO: Free Stock Analysis Report
 
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