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Turtle Beach (HEAR) to Report Q2 Earnings: What Lies Ahead?

Zacks Equity Research

Turtle Beach Corporation HEAR is scheduled to report second-quarter 2019 results after the closing bell on Aug 8. In the last reported quarter, the company delivered a positive earnings surprise of 333.3%. Notably, Turtle Beach surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 613.3%.

The audio technology company is poised to benefit from solid product performance and market traction, driven by innovation, quality products, strong brand and retail partnerships.

Let’s find out how things are shaping up prior to the announcement.

Factors to Consider

During the quarter, Turtle Beach unveiled Recon 70 gaming headset with powerful audio and microphone to replace its iconic Recon 50, which was the best-selling product in its category in North America for the past two years. Reportedly, Recon 70 works with all the leading brands and is available in both black and white options for Xbox One and PlayStation4, and in red accented version for Nintendo.

In the to-be-reported quarter, Turtle Beach completed the acquisition of ROCCAT — a leading German PC peripherals company — for $15.6 million in cash plus up to $3.3 million in earnout payments. The strategic move marks the beginning of the next phase in the audio technology company’s expansion into the $2.9 billion market for PC gaming headsets, mice and keyboards. This is considered to be a major step in its goal of building $100 million PC gaming accessories business.

All these moves are likely to get reflected in the upcoming results. The Zacks Consensus Estimate for total revenues for the second quarter is pegged at $42 million. In the year-earlier quarter, it generated revenues of $61 million.

Earnings Whispers

Our proven model does not conclusively show that Turtle Beach will beat earnings in the second quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +45.45% with the former pegged at a loss of 10 cents and the latter at a loss of 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Turtle Beach Corporation Price and EPS Surprise


Turtle Beach Corporation Price and EPS Surprise

Turtle Beach Corporation price-eps-surprise | Turtle Beach Corporation Quote

Zacks Rank: Turtle Beach has a Zacks Rank #4 (Sell).

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider

Here are some companies 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:

Ciena Corporation CIEN is set to release quarterly numbers on Aug 29. It has an Earnings ESP of +5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Momo Inc. MOMO is +1.35% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Aug 28.

The Earnings ESP for Avalara, Inc. AVLR is +21.05% and it carries a Zacks Rank of 3. The company is slated to report quarterly numbers on Aug 7.

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