Yahoo Finance Is AOL Inc. (AOL) Likely to Beat Earnings Estimates in Q1? - Analyst Blog
The New York-based Internet service providing company AOL Inc. AOL is set to report first-quarter 2015 results, before the opening bell, on May 8. Notably, the company has surpassed the Zacks Consensus Estimate twice but missed the other two times in the last four quarters. It posted a 41.82% positive earnings surprise last quarter, taking the four-quarter average earnings surprise to 5.61%. We expect the company to continue its upbeat performance in the first quarter as well.
Why a Likely Positive Surprise?
Our proven model shows that AOL is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +8.70%. This is very meaningful and a leading indicator of a likely earnings surprise.
Zacks Rank: AOL has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of AOL’s Zacks Rank #3 and +8.70% ESP makes us very confident in looking for an earnings beat on May 8.
What's Driving the Better-Than-Expected Earnings?
AOL is a leading global web services company with an extensive suite of brands and offerings and a substantial audience base globally. The company is focused on attracting and engaging consumers and providing valuable online advertising services on both its owned and operated properties as well as third-party websites. We believe that these strategies will continue to drive the company’s top line in the first quarter.
Further, we consider AOL to be well positioned to benefit from the strong traffic growth in search, online video and mobile businesses. Moreover, the online gaming business has strong growth potential.
Additionally, of late, the company has been witnessing significant growth in its user base, higher pricing and sale of premium video platforms which are likely to boost its top line in the to-be-reported quarter.
Other Stocks to Consider
Here are some other companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Cincinnati Bell Inc. CBB, with an Earnings ESP of +80.00% and a Zacks Rank #3
Cogent Communications Holdings Inc. CCOI, with an Earnings ESP of +33.33% and a Zacks Rank #3
Broadridge Financial Solutions Inc. BR, with an Earnings ESP of 3.85% and a Zacks Rank #3
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