What's in the Cards for NortonLifeLock (NLOK) in Q2 Earnings?

NortonLifeLock NLOK is slated to report second-quarter fiscal 2023 results on Nov 8.

The company projects quarterly revenues between $695 million and $705 million, suggesting a year-over-year increase in the band of flat to 1.4%. The Zacks Consensus Estimate for second-quarter revenues is pegged at $699.7 million, indicating a marginal improvement from the year-ago quarter’s figure of $695 million.

For the second quarter of fiscal 2023, the company expects non-GAAP earnings from continuing operations in the range of 44 cents-46 cents per share. The Zacks Consensus Estimate is pegged at 45 cents per share, a couple of cents higher than the year-ago reported figure of 43 cents.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four, the average surprise being 2.9%.

Let’s see how things have shaped up before this announcement.

NortonLifeLock Inc. Price and EPS Surprise

NortonLifeLock Inc. price-eps-surprise | NortonLifeLock Inc. Quote

Factors to Note

NLOK’s second-quarter performance is likely to have benefited from the expansion of its Norton family of products, including Norton Utilities Ultimate and Norton AntiTrack, while offering a broad range of cyber safety products with new features.

Moreover, the increased demand for cybersecurity and ID analytics solutions amid the hybrid work environment is likely to have favored the to-be-reported quarter’s performance.

Over the past couple of years, as more people are shifting online, the need for online privacy has been rising. Global workforces working remotely are logging into employers' networks, escalating the need for digital security. This trend is likely to have spurred the demand for NortonLifeLock’s security products in the fiscal second quarter.

An expansion in the EMEA, Asia Pacific and Latin American regions is also likely to have been an upside for NortonLifeLock this season.

Further, the growing number of client bookings, supported by their retention and renewal rates, is anticipated to have contributed to the company’s fiscal second-quarter top line. At the end of the first quarter of fiscal 2023, NortonLifeLock’s client retention rate was slightly more than 85%, while bookings grew 1%.

The Norton antivirus maker’s sustained focus on growing partner channels and employee benefit programs is likely to have driven its performance in the quarter to be reported.

However, NLOK’s overall second-quarter performance is likely to have been negatively impacted by unfavorable foreign exchange rates. On its last earnings conference call, the company stated that the strong U.S. dollar is likely to negatively impact second-quarter revenues by 4% and non-GAAP earnings by 3 cents per share.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for NortonLifeLock this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though NLOK currently carries a Zacks Rank of 2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, Salesforce CRM, Cisco CSCO and Analog Devices ADI have the right combination of elements to post an earnings beat in their upcoming releases.

Salesforce is anticipated to report third-quarter fiscal 2023 results on Nov 29. The company carries a Zacks Rank #3 and an Earnings ESP of +7.13% at present.

CRM's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 18.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s quarterly earnings is pegged at $1.21 per share, suggesting a year-over-year decline of 4.7%. Its quarterly revenues are estimated to increase 13.8% year over year to $7.81 billion.

Cisco carries a Zacks Rank #3 and an Earnings ESP of +1.46%. The company is slated to report first-quarter fiscal 2023 results on Nov 16. CSCO's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 1.8%.

For the first quarter, the Zacks Consensus Estimate for Cisco’s earnings is pegged at 84 cents per share, indicating a 2.4% year-over-year increase. Revenues are expected to grow 3.3% to $13.3 billion.

Analog Devices carries a Zacks Rank #3 and has an Earnings ESP of +1.10. The company will report its fourth-quarter fiscal 2022 results on Nov 22. Its earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%.

The Zacks Consensus Estimate for Analog Devices’ fourth-quarter earnings stands at $2.58 per share, suggesting a whopping year-over-year increase of 49.1%. Revenues are estimated to grow 35.2% year over year to $3.16 billion.

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