Is Pandora (P) Poised to Beat Earnings Estimates? - Analyst Blog
April 23 2014 - 4:50PM
Zacks
We expect Pandora Media, Inc. (P) to beat
expectations when it reports first quarter 2014 results on Apr
24.
Let us see how things are shaping up for this quarter.
A Likely Positive Surprise
Our proven model shows that Pandora is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise Prediction,
or Earnings ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, is at +5.26%.
This is very meaningful and a leading indicator of a likely
positive earnings surprise for shares.
Zacks Rank #2 (Buy): Note that stocks with Zacks
Ranks of #1, #2 and #3 have a significantly higher chance of
beating earnings. The sell-rated stocks (#4 and #5) should never be
considered going into an earnings announcement.
The combination of Pandora’s Zacks Rank #2 and +5.26% ESP makes us
very confident of an earnings beat on Apr 24.
What Will Drive the Better-than Expected
Earnings?
Pandora’s growing user base is a major positive. Per the latest
audio metrics, Pandora’s listener hours for Mar 2014 were up 14.0%
on a year-over-year basis. Also, the share of total U.S. radio
listening went up to 9.1% from 8.1% reported in the year-ago month.
Additionally, the number of active listeners went up 8.4% on a
year-over-year basis.
Improving monetization and strong mobile growth will drive the top
line. However, rising costs related to licensing will remain a
headwind in the near term. Moreover, higher operating expenses are
expected to hurt profitability in the near term.
Nevertheless, we believe that Pandora’s popular service, driven by
its effective discovery engine and a well-established
infrastructure, places it well to compete against the likes of
Apple (AAPL), Spotify and Sirius
XM (SIRI).
Other Stocks to Consider
Pandora is not the only firm looking up this earnings season. We
also see a likely earnings beat coming from On
Semiconductor Corp. (ONNN), which has an Earnings ESP of
+6.67% and a Zacks #1 Rank (Strong Buy)
APPLE INC (AAPL): Free Stock Analysis Report
ON SEMICON CORP (ONNN): Free Stock Analysis Report
PANDORA MEDIA (P): Free Stock Analysis Report
SIRIUS XM HLDGS (SIRI): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Sirius XM (NASDAQ:SIRI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Sirius XM (NASDAQ:SIRI)
Historical Stock Chart
From Apr 2023 to Apr 2024