Nyse Order Imbalance 78090.0 Shares On Sell Side

The market expects Elastic (ESTC) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended October 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.

The earnings report, which is expected to be released on November 21, 2024, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.

While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus Estimate

This software developer is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +2.7%.

Revenues are expected to be $354.24 million, up 14.1% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 0.65% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Earnings Whisper

Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Elastic?

For Elastic, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -3.20%.

On the other hand, the stock currently carries a Zacks Rank of #4.

So, this combination makes it difficult to conclusively predict that Elastic will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Elastic would post earnings of $0.25 per share when it actually produced earnings of $0.35, delivering a surprise of +40%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Elastic doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

An Industry Player's Expected Results

Among the stocks in the Zacks Internet - Software industry, Snowflake Inc. (SNOW) is soon expected to post earnings of $0.15 per share for the quarter ended October 2024. This estimate indicates a year-over-year change of -40%. This quarter's revenue is expected to be $898.77 million, up 22.4% from the year-ago quarter.

Over the last 30 days, the consensus EPS estimate for Snowflake has been revised 0.1% down to the current level. Nevertheless, the company now has an Earnings ESP of 13.92%, reflecting a higher Most Accurate Estimate.

This Earnings ESP, combined with its Zacks Rank #4 (Sell), makes it difficult to conclusively predict that Snowflake will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates three times.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Zacks Investment Research

D-Wave Quantum Inc. (QBTS) came out with a quarterly loss of $0.11 per share versus the Zacks Consensus Estimate of a loss of $0.10. This compares to loss of $0.12 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -10%. A quarter ago, it was expected that this company would post a loss of $0.10 per share when it actually produced a loss of $0.10, delivering no surprise.

Over the last four quarters, the company has not been able to surpass consensus EPS estimates.

D-WAVE QUANTUM, which belongs to the Zacks Internet - Software industry, posted revenues of $1.87 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 26.84%. This compares to year-ago revenues of $2.56 million. The company has not been able to beat consensus revenue estimates over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

D-WAVE QUANTUM shares have added about 102.3% since the beginning of the year versus the S&P 500's gain of 25.5%.

What's Next for D-WAVE QUANTUM?

While D-WAVE QUANTUM has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for D-WAVE QUANTUM: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.09 on $2.92 million in revenues for the coming quarter and -$0.40 on $10.12 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Elastic (ESTC), another stock in the same industry, has yet to report results for the quarter ended October 2024. The results are expected to be released on November 21.

This software developer is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +2.7%. The consensus EPS estimate for the quarter has been revised 0.7% lower over the last 30 days to the current level.

Elastic's revenues are expected to be $354.24 million, up 14.1% from the year-ago quarter.

Zacks Investment Research

Fortinet (FTNT) came out with quarterly earnings of $0.63 per share, beating the Zacks Consensus Estimate of $0.51 per share. This compares to earnings of $0.41 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 23.53%. A quarter ago, it was expected that this network security company would post earnings of $0.41 per share when it actually produced earnings of $0.57, delivering a surprise of 39.02%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Fortinet, which belongs to the Zacks Internet - Software industry, posted revenues of $1.51 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.09%. This compares to year-ago revenues of $1.33 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Fortinet shares have added about 38.2% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Fortinet?

While Fortinet has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Fortinet: favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.51 on $1.59 billion in revenues for the coming quarter and $2.04 on $5.85 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Elastic (ESTC), has yet to report results for the quarter ended October 2024.

This software developer is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +2.7%. The consensus EPS estimate for the quarter has been revised 0.7% lower over the last 30 days to the current level.

Elastic's revenues are expected to be $354.24 million, up 14.1% from the year-ago quarter.

Zacks Investment Research

Oddity Tech (ODD) came out with quarterly earnings of $0.32 per share, beating the Zacks Consensus Estimate of $0.22 per share. This compares to earnings of $0.21 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 45.45%. A quarter ago, it was expected that this online retailer of cosmetics and beauty products would post earnings of $0.67 per share when it actually produced earnings of $0.82, delivering a surprise of 22.39%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Oddity Tech, which belongs to the Zacks Internet - Software industry, posted revenues of $119 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.78%. This compares to year-ago revenues of $94.47 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Oddity Tech shares have lost about 9% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for Oddity Tech?

While Oddity Tech has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Oddity Tech: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.13 on $117.1 million in revenues for the coming quarter and $1.76 on $637.29 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 24% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Elastic (ESTC), has yet to report results for the quarter ended October 2024.

This software developer is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +2.7%. The consensus EPS estimate for the quarter has been revised 4.8% lower over the last 30 days to the current level.

Elastic's revenues are expected to be $354.24 million, up 14.1% from the year-ago quarter.

Zacks Investment Research

Investors in Elastic N.V. ESTC need to pay close attention to the stock based on moves in the options market lately. That is because the Jan. 17, 2025 $30.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Elastic shares, but what is the fundamental picture for the company? Currently, Elastic is a Zacks Rank #3 (Hold) in the Internet - Software industry that ranks in the Top 24% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while two analysts have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from 39 cents per share to 38 cents in that period.

Given the way analysts feel about Elastic right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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Zacks Investment Research