Wall Street's Insights Into Key Metrics Ahead of Nutanix (NTNX) Q1 Earnings

Palo Alto Networks PANW delivered first-quarter fiscal 2025 non-GAAP earnings of $1.56 per share, which surpassed the Zacks Consensus Estimate by 5.4%. The figure improved 13% year over year, exceeding management’s guidance of $1.47-$1.49.

Palo Alto’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 7.6%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

PANW’s first-quarter fiscal 2025 revenues of $2.14 billion beat the Zacks Consensus Estimate by 0.93% and came marginally higher than management’s guidance of $2.10-$2.13 billion.

The top line rose 14% year over year, driven by an impressive performance across its segments. Additionally, the growing adoption of PANW’s Next-Generation Security platforms, driven by the hybrid work culture and a robust need for stronger security, also boosted first-quarter fiscal 2025 results.

Palo Alto’s impressive first-quarter results complemented by its strong market presence compelled it to raise guidance for the fiscal second quarter and full-year 2025. Better-than-expected fiscal first-quarter results, along with an optimistic outlook, are expected to pull up its shares. On a year-to-date basis, shares of PANW soared 26.8% compared with the Zacks Internet – Software industry’s return of 28%.

Palo Alto Networks, Inc. Price, Consensus and EPS Surprise

Palo Alto Networks, Inc. price-consensus-eps-surprise-chart | Palo Alto Networks, Inc. Quote

Palo Alto’s Q1 2025 Details

PANW’s strong top-line performance can be attributed to the immense year-over-year rise in its Subscription & Support revenues backed by a modest increase in its Product revenues.

Product revenues increased 3.7% year over year to $353.8 million and contributed to 16.5% of the total revenues. The company’s Subscription and Support revenues, which accounted for 83.5% of the total revenues, improved 16% to $1.79 billion.

Deferred revenues at the end of the fiscal first quarter were $ 5.51 billion. Palo Alto’s remaining performance obligation climbed to $12.6 billion, reflecting a year-over-year increase of 20%.

Palo Alto’s next-generation security annualized recurring revenues were $4.5 billion in the reported quarter, which grew 40% year over year and 6.6% from the previous quarter.

Non-GAAP gross profits increased 12.8% to $1.653 billion. The non-GAAP gross margin contracted 70 basis points (bps) to 77.3%. The non-GAAP operating income rose 16.4% to $544.9 million. Meanwhile, the non-GAAP operating margin expanded 60 bps to 28.8% compared with the year-ago quarter.

PANW’s Balance Sheet & Cash Flow

Palo Alto had cash and cash equivalents and short-term investments of $3.4 billion as of Oct. 31, 2024, compared with $2.56 billion as of July 31, 2024.

PANW generated an operating cash flow of $1.51 billion and a non-GAAP adjusted free cash flow of $1.47 billion in the first quarter fiscal of 2025.

Palo Alto Raises FY25 Guidance

For fiscal 2025, Palo Alto expects revenues between $9.12 billion and $9.17 billion, up from the earlier projected range of $9.10-$9.15 billion. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $9.13 billion, indicating a rise of 13.75%. Remaining Performance Obligation is still projected in the range of $15.2-$15.3 billion. Next-Gen Security ARR is estimated in the band of $5.52-$5.57 billion, up from the previous forecast of $5.42-$4.47 billion.

PANW’s fiscal 2025 non-GAAP operating margin is still projected in the range of 27.5-28%. Its adjusted free cash flow margin is still estimated in the range of 37-38%. The company expects non-GAAP earnings per share in the range of $6.26-$6.39, up from the previous guidance of $6.18-$6.31. The consensus mark for fiscal 2025 earnings is pinned at $6.26 per share, suggesting an improvement of 10.4%. The figure remains unchanged over the past 60 days.

For the second quarter of fiscal 2025, PANW projects revenues between $2.22 billion and $2.25 billion, which suggests year-over-year growth of 12-14%. The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is pegged at $2.23 billion, indicating a rise of 12.9%. Remaining Performance Obligations are anticipated between $12.9 billion and $13 billion. Next-Gen Security ARR is expected in the band of $4.70-$4.75 billion.

Non-GAAP earnings are projected in the range of $1.54-$1.56 per share. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $1.55 per share, unchanged over the past 60 days, indicating a year-over-year improvement of 6.2%.

Zacks Rank & Other Stocks to Consider

Currently, PANW carries a Zacks Rank #2 (Buy).

Blackberry BB, Advantest ATEYY and Nutanix NTNX are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.

BB and ATEYY sport a Zacks Rank #1 (Strong Buy) each, while NTNX carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

BB shares have plunged 34.8% year to date. It is set to report third-quarter fiscal 2025 results on Dec. 19, 2024.

ATEYY shares have surged 80.3% year to date. It is slated to report its third-quarter 2024 results on Jan. 29, 2025.

NTNX shares have gained 45.6% year to date. It is set to report first-quarter fiscal 2025 results on Nov. 26.

Zacks Investment Research

Nutanix (NTNX) ended the recent trading session at $69.44, demonstrating a +1.46% swing from the preceding day's closing price. Elsewhere, the Dow saw an upswing of 0.32%, while the tech-heavy Nasdaq depreciated by 0.11%.

Coming into today, shares of the enterprise cloud platform services provider had gained 11.47% in the past month. In that same time, the Computer and Technology sector gained 1.32%, while the S&P 500 gained 0.97%.

The upcoming earnings release of Nutanix will be of great interest to investors. The company's earnings report is expected on November 26, 2024. The company's upcoming EPS is projected at $0.31, signifying a 6.9% increase compared to the same quarter of the previous year. Alongside, our most recent consensus estimate is anticipating revenue of $571.72 million, indicating a 11.87% upward movement from the same quarter last year.

NTNX's full-year Zacks Consensus Estimates are calling for earnings of $1.41 per share and revenue of $2.46 billion. These results would represent year-over-year changes of +7.63% and +14.27%, respectively.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Nutanix. These recent revisions tend to reflect the evolving nature of short-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.17% increase. At present, Nutanix boasts a Zacks Rank of #2 (Buy).

Digging into valuation, Nutanix currently has a Forward P/E ratio of 48.71. This expresses a premium compared to the average Forward P/E of 27.71 of its industry.

It is also worth noting that NTNX currently has a PEG ratio of 2.46. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. By the end of yesterday's trading, the Computers - IT Services industry had an average PEG ratio of 2.81.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 47, which puts it in the top 19% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

Zacks Investment Research

Analog Devices ADI is scheduled to report fourth-quarter fiscal 2024 results on Nov. 26.

Analog Devices expects revenues of $2.4 billion (+/- $100 million). The Zacks Consensus Estimate is also pegged at $2.40 billion, indicating a decline of 11.6% from the year-ago quarter’s figure.

ADI anticipates adjusted earnings per share of $1.63 (+/- $0.10). The consensus mark for earnings is pinned at $1.63 per share, indicating an 18.9% fall from the prior-year quarter’s figure. The estimate has remained unchanged over the past 60 days.

In the trailing four quarters, ADI’s earnings surpassed the Zacks Consensus Estimate thrice, and matched once, with an average surprise of 4.4%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors to Consider for ADI

Analog Devices’ fourth-quarter performance is likely to have experienced strong growth across its industrial and consumer end markets. The consensus mark for industrial revenues is pegged at $1.1 billion, indicating a fall of 19.8% from the year-ago quarter’s number. The consensus estimate for consumer revenues is pegged at $340.3 million, indicating a rise of 16.8% from the year-ago quarter’s actual.

Strength in Energy Transmission and Distribution, backed by the customers' rapid increase in upgrading and digitizing the electrical grid to respond to the accelerating energy demand partly driven by the proliferation of electric transportation and rapid AI adoption, is expected to have boosted the to-be-reported quarter’s performance.

The Automation segment is likely to have contributed strongly in the quarter under review. The recent collaboration of ADI with Flagship Pioneering, which integrates ADI's expertise in engineering for analog and digital semiconductors with the latter’s expertise in applied biology is likely to have generated, to develop a fully digitized biological world is a notable move.

Analog Devices, Inc. Price and EPS Surprise

Analog Devices, Inc. price-eps-surprise | Analog Devices, Inc. Quote

However, macroeconomic challenges including the protracted inflationary conditions and still-high interest rates are likely to have posed challenges for the company in the quarter being reviewed. Additionally, escalating tensions between the United States and China may have raised concerns.

Flattish performance across communications is expected to have hurt the top line in the fiscal fourth quarter. The Zacks Consensus Estimate for communications revenues is pegged at $270.3 million, indicating a fall of 25.9% from the year-ago quarter’s reported figure.

Weakness across the Automotive end markets is likely to have weighed on the top-line performance. The Zacks Consensus Estimate for automotive revenues is pegged at $661.7 million, indicating a decline of 10.4% from the year-ago quarter’s figure.

Nonetheless, the recent deal with India’s Tata Group is likely to have benefited Analog Device’s Automotive segment during the fourth quarter. ADI has partnered with Tata Group to explore opportunities for semiconductor manufacturing in India and use ADI's products in Tata applications like electric vehicles and network infrastructure.

What Our Proven Model Says for ADI’s Q4 Earnings

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Analog Devices has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth considering, as our model shows that they have the right combination of elements to beat on earnings this reporting cycle.

NVIDIA NVDA has an Earnings ESP of +1.30% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVDA’s shares have skyrocketed 196.8% year to date. It is slated to report its third-quarter 2024 results on Nov. 20.

The Zacks Consensus Estimate for NVDA’s third-quarter 2024 earnings is pegged at 75 cents per share, up by a penny over the past 60 days. This suggests a rise of 87.5% from the year-ago quarter’s reported figure.

Nutanix NTNX has an Earnings ESP of +1.64% and carries a Zacks Rank #2 at present.

NTNX shares have gained 43.5% year to date. It is set to report first-quarter fiscal 2025 results on Nov. 26.

The Zacks Consensus Estimate for NTNX’s first-quarter fiscal 2025 earnings is pegged at 31 cents per share, up by a couple of pennies over the past 60 days, indicating an improvement of 7% from the year-ago quarter’s reported figure.

Hewlett Packard HPE has an Earnings ESP of +1.51% and carries a Zacks Rank #3 at present.

HPE shares have surged 26.8% year to date. It is set to report fourth-quarter results on Dec. 5.

The Zacks Consensus Estimate for HPE’s fourth-quarter 2024 earnings is pegged at 55 cents per share, unchanged over the past 60 days, indicating an improvement of 5.8% from the year-ago quarter’s reported figure.

Zacks Investment Research

Semtech Corporation SMTC is scheduled to report third-quarter fiscal 2025 results on Nov. 25.

For the fiscal third quarter, Semtech anticipates revenues to be $233 million (+/- 5 million). The Zacks Consensus Estimate for revenues is pegged at $232.6 million, indicating a rise of 15.8% from the year-ago quarter.

SMTC anticipates non-GAAP earnings per share to be 23 cents (+/- 3 cents per share). The consensus mark for the same is pegged at 24 cents, unchanged over the past 60 days, indicating a robust improvement from the year-ago quarter’s earnings of 2 cents.

In the trailing four quarters, Semtech's earnings surpassed the Zacks Consensus Estimate thrice while missing once, the average surprise being 34%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors to Consider for SMTC

Semtech’s fiscal third-quarter performance is likely to have benefited from strength across its infrastructure and high-end-consumer end markets.Similarly, the wireless end-market is likely to have witnessed strong growth owing to SMTC’s increasing 5G offerings and expansion of its distribution footprint in Canada with GetWireless, one of the leading distributors of cellular solutions that connect the Internet of Things.

Strong Momentum across its Signal Integrity and Analog Mixed Signal & Wireless product lines are expected to have contributed well. The growing adoption of artificial intelligence might have been a plus for the upcoming quarter.

Semtech Corporation Price and EPS Surprise

Semtech Corporation price-eps-surprise | Semtech Corporation Quote

Growing traction across hyperscale data center applications on the back of Tri-Edge and FiberEdge transimpedance amplifier products is expected to have aided SMTC’s performance in the to-be-reported quarter.

Robust demand for the company’s passive optical network (PON) products is likely to have continued driving revenue growth in the fiscal third quarter. The launch of the PON-X solutions, the GN25L81 2.5G combo chip and the GN25L42 2.5G burst mode PIN trans-impedance amplifier (Super TIA) devices for 2.5G PON FTTR Optical Line Terminal (OLT) applications are likely to have generated impressive third-quarter performance.

The increasing demand for LoRa devices and LoRaWAN standards is expected to have contributed positively to top-line growth in the to-be-reported quarter. The availability of its one-channel LoRaWAN hub reference design and evaluation kit targeting smaller-scale network deployments, such as for SMB/SME and smart home applications, is anticipated to impact its third-quarter results positively.

However, Macroeconomic challenges, including the protracted inflationary conditions and still-high interest rates are likely to have posed challenges for the company in the fiscal third quarter. Additionally, escalating tensions between the United States and China might have raised concerns. Softness in the industrial end-market and Connectivity segment is expected to have been a major negative.

What Our Proven Model Says for SMTC’s Q3 Earnings

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Semtech has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

NVIDIA NVDA has an Earnings ESP of +1.30% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVDA’s shares have skyrocketed 196.8% year to date. It is slated to report its third-quarter 2024 results on Nov. 20.

The Zacks Consensus Estimate for NVDA’s third-quarter 2024 earnings is pegged at 75 cents per share, up by a penny over the past 60 days. This suggests a rise of 87.5% from the year-ago quarter’s reported figure.

Nutanix NTNX has an Earnings ESP of +1.64% and carries a Zacks Rank #2 at present.

NTNX shares have gained 43.5% year to date. It is set to report first-quarter fiscal 2025 results on Nov 26.

The Zacks Consensus Estimate for NTNX’s first-quarter fiscal 2025 earnings is pegged at 31 cents per share, up by couple of pennies penny over the past 60 days, indicating an improvement of 7% from the year-ago quarter’s reported figure.

Hewlett Packard HPE has an Earnings ESP of +1.51% and carries a Zacks Rank #3 at present.

HPE shares have surged 26.8% year to date. It is set to report fourth-quarter results on Dec 5.

The Zacks Consensus Estimate for HPE’s fourth-quarter 2024 earnings is pegged at 55 cents per share, unchanged over the past 60 days, indicating an improvement of 5.8% from the year-ago quarter’s reported figure.

Zacks Investment Research

Wall Street expects a year-over-year increase in earnings on higher revenues when Nutanix (NTNX) reports results for the quarter ended October 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on November 26. On the other hand, if they miss, the stock may move lower.

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

Zacks Consensus Estimate

This enterprise cloud platform services provider is expected to post quarterly earnings of $0.31 per share in its upcoming report, which represents a year-over-year change of +6.9%.

Revenues are expected to be $571.72 million, up 11.9% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 1.52% 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 Nutanix?

For Nutanix, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +1.64%.

On the other hand, the stock currently carries a Zacks Rank of #2.

So, this combination indicates that Nutanix will most likely beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. 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 Nutanix would post earnings of $0.20 per share when it actually produced earnings of $0.27, delivering a surprise of +35%.

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.

Nutanix appears 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.

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

Zacks Investment Research