These 3 Stocks Will Surprise Investors This Earnings Season

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Earnings season is typically inundated with coverage of popular companies such as Facebook (FB), Apple (AAPL), Google (GOOGL) and Amazon (AMZN). Questions like “Has Apple Peaked?” or “Can Anything Stop Facebook?” flood our newsfeeds while small companies go by the wayside. With the upcoming earnings season expected to be largely disappointing, investors will be looking for the undercovered names to beat earnings. These are names that don’t garner the media attention of today’s tech giants. They include Adobe, Take-Two Interactive and Arista Networks. According to the Estimize data these names have been on the move, signified by consistent year over year growth, heavy upward revisions, and a history of beating expectations. The combination of these factors have typically led to substantial out-performances and a pop in share prices.

Adobe Systems (ADBE) Information Technology – Software

In the past 2 years, Adobe has seen both earnings and revenue steadily increase. In 2014, Adobe was plagued with low single digit growth, yet last quarter YoY earnings growth topped 50% with revenue exceeding 20%. The new age of cloud computing has been key to Adobe’s success. Currently its two biggest drivers Creative Cloud and Marketing Cloud products continue to see record adoption rates. Early indications look as if increasing booking growth will bring strong Q2 earnings. The Estimize consensus is looking for earnings of 70 cents per share on $1.4 billion in revenue, 2 cents higher than Wall Street on the bottom and $10 million on the top. This reflects a 45% increase in EPS from a year earlier with revenue expected to grow 21%. Estimates should continue to rise in the run up to its report and are already up nearly 10% in the last 3 months.

Take-Two Interactive (TTWO) Information Technology – Software

Video game publishers have greatly benefited from a transition away from physical games towards digital downloads. Electronic Arts, Activision-Blizzard and Take-Two Interactive have seen shares increase over 15% thanks to increasing revenue from the digital space. For Take-Two, the ongoing success of its Grand Theft Auto and 2k Sports series has produced huge financial prosperity. The GTA and NBA 2K franchises both headlined a list of the top 10 best selling games of 2015. Fiscal 2017 is poised to be another strong year for Take-Two with new and innovative titles prepared to hit shelves in the coming months. However, without a new Grand Theft Auto game until 2018 it might be hard to replicate the runaway success from past years. The Estimize community is still high on this name to post better than expected earnings. The stock has typically tracked earnings, increasing 2% through a report and 3% in the month following. Shares are up 34% in the past 12 months with the a strong possibility of breaking out on another strong report.

Arista Networks (ANET) Information Technology – Communications Equipment

Cloud services continue to be one of the fastest growing sectors in the technology industry. This has proved beneficial for the less glamorous networking and data center solutions. Companies like Cisco, Juniper Networks, Qualcomm and Arista Networks have seen a jump in recent years thanks to the influx of demand for cloud networking solutions. While Arista Networks doesn’t carry the same clout as Cisco or Qualcomm it continues to respond favorably to the positive trends. Last quarter Arista posted 35% increases on both the top and bottom line thanks to the ongoing shift to cloud networking. The Estimize community is optimistic that Arista will continue to gain when it reports its second quarter earnings. The consensus data is looking for earnings per share of 67 cents on $260.72 million in revenue, reflecting a 24% increase in earnings and 33% in sales. Typically, the stock is a positive mover during earnings season, making its biggest gains 30 days following its report. Shares are currently up 15% in the past 3 months with expectations to make further gains as we approach the company’s report date.