Yahoo Finance What's in the Offing for Gen Digital (GEN) in Q4 Earnings?
Gen Digital GEN is slated to report fourth-quarter fiscal 2023 results on May 11. Gen Digital was formerly known as NortonLifeLock Inc. and was trading under the NLOK ticker symbol.
NortonLifeLock changed its name and ticker symbol, effective from Nov 8, 2022, following the completed merger of NortonLifeLock and Avast Plc. The newly named company unites trusted consumer safety brands, including Norton, Avast, LifeLock, AVG, Avira, CCleaner and ReputationDefender.
The company projects quarterly revenues between $935 million and $945 million, suggesting a year-over-year increase in the band of 30%-32%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $937 million, indicating a 30.7% improvement from the year-ago quarter’s figure of $717 million.
For the fourth quarter of fiscal 2023, Gen Digital expects non-GAAP earnings in the range of 44 cents-46 cents per share. The Zacks Consensus Estimate is pegged at 43 cents per share, lower than the year-ago reported figure of 46 cents.
The company’s earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, the average surprise being 4.1%.
Let’s see how things have shaped up before this announcement.
Gen Digital Inc. Price and EPS Surprise
Gen Digital Inc. price-eps-surprise | Gen Digital Inc. Quote
Factors to Note
Gen Digital’s fourth-quarter top line is likely to have been primarily driven by the inclusion of the Avast business. Moreover, the expansion of product offerings following the merger of NortonLifeLock and Avast is likely to have facilitated the newly formed company to cross-sell products to each other’s customers, thereby aiding revenue growth.
GEN’s fourth-quarter performance is also likely to have benefited from the increased demand for cybersecurity and ID analytics solutions amid the hybrid work environment. 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 Gen Digital’s security products in the fiscal fourth quarter.
An expansion in the EMEA, Asia Pacific and Latin American regions is also likely to have been an upside for GEN 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 fourth-quarter top line. At the end of the third quarter of fiscal 2023, Gen Digital’s client retention rate was 75%, while bookings grew 29% on a year-over-year basis.
The Norton and Avast 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, GEN’s overall fourth-quarter performance is likely to have been negatively impacted by unfavorable foreign exchange rates.
On its last earnings conference call, Gen Digital stated that unfavorable foreign currency exchange rates would negatively impact fourth-quarter revenues. In the fourth quarter, foreign currency headwinds lowered revenues by $34 million.
Moreover, the company’s earnings per share are expected to have been negatively impacted by the equity dilution impact of the Avast acquisition. To finance the acquisition of Avast, Gen Digital issued 94 million new shares.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Gen Digital 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 GEN currently carries a Zacks Rank of 3, 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, Cisco Systems CSCO, Photronics PLAB and HP Inc. HPQ have the right combination of elements to post an earnings beat in their upcoming releases.
Cisco carries a Zacks Rank #3 and has an Earnings ESP of +1.59%. The company is slated to report third-quarter fiscal 2023 results on May 17. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 1.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSCO’s third-quarter earnings is pegged at 97 cents per share, indicating a year-over-year increase of 11.5%. The consensus mark for revenues stands at $14.39 billion, suggesting a year-over-year increase of 12.1%.
Photronics carries a Zacks Rank #3 and has an Earnings ESP of +2.27%. The company is expected to report second-quarter fiscal 2023 results on May 24. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while matching the same on one occasion, with the average surprise being 16.8%.
The Zacks Consensus Estimate for Photronics’ third-quarter earnings stands at 44 cents per share, implying a year-over-year decline of 10.2%. It is estimated to report revenues of $212 million, which suggests an increase of approximately 3.7% from the year-ago quarter.
HP is anticipated to report second-quarter fiscal 2023 results on May 30. The company has a Zacks Rank #3 and an Earnings ESP of +2.24% at present. HP’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 1.1%.
The Zacks Consensus Estimate for HPQ’s second-quarter earnings is pegged at 76 cents per share, suggesting a decline of 29.6% from the year-ago quarter’s earnings of $1.11. HP’s quarterly revenues are estimated to decrease 19.9% year over year to $13.21 billion.
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