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Citrix Systems (CTXS) Q1 Earnings: Is a Beat in the Cards?

Zacks Equity Research
Updated

Citrix Systems Inc. CTXS is scheduled to report first-quarter 2018 results on Apr 25. The company has witnessed a remarkable streak of beating earnings estimates. In fact, Citrix surpassed the Zacks Consensus Estimate in the trailing four quarters, recording an average positive earnings surprise of 7.1%.

Let’s see how things are shaping up prior to this announcement.

What Our Model Says

Per the Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has good chances of beating estimates.

The Sell-rated stocks (4 or 5) are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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Citrix has a Zacks Rank #2 and an Earnings ESP of +0.07%, which raises confidence about a possible earnings surprise.

Citrix Systems, Inc. Price and EPS Surprise

Citrix Systems, Inc. Price and EPS Surprise | Citrix Systems, Inc. Quote

The Zacks Consensus Estimate for the quarter is pegged at $1.05, reflecting a year-over-year increase of 8.3%. We note that the Zacks Consensus Estimate has remained unchanged over the past 30 days. Additionally, analysts polled by Zacks project revenues of roughly $675.8 million, up approximately 2% from the year-ago quarter.

Factors Driving Q1 Results

Citrix’s Software-as-a-Service ("SaaS") revenues are expected to register strong growth in the first quarter, bolstering the top line. Notably, SaaS revenues aided the results in the preceding four quarters as well. The Zacks Consensus Estimate for first-quarter SaaS revenues are pegged at $51 million, approximately 32% higher than the year-ago quarter.

The company deployed its Cloud services including XenDesktop and XenApp on Oracle Cloud Marketplace in December last year. This is likely to have led to new customer additions, consequently generating incremental revenues for the first quarter.

The company’s efforts to expand product portfolio are also impressive. Its strong customer base is another positive. Further, the merger between LogMeIn and Citrix's GoTo business, concluded last year, is likely to be value accretive in the quarter to be reported.

Additionally, the company’s endeavors to reward shareholders through dividends and share buybacks are encouraging. In November 2017, the company’s board of directors announced capital return program under which it aims to return $2 billion to its shareholders by Dec 31, 2018.

The company’s shares have returned 9.8% year to date, in line with the 9.5% rally of the industry it belongs to.

 

 

Other Stocks to Consider

Here are a couple of stocks from the broader technology sector, you may want to consider as our proven model shows that these too have the right combination of elements to post an earnings beat this quarter.

Western Digital WDC has an Earnings ESP of +2.30% and a Zacks Rank #1.

Paycom PAYC has an Earnings ESP of +0.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices AMD has an Earnings ESP of +1.19% and a Zacks Rank #3.

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Western Digital Corporation (WDC) : Free Stock Analysis Report
 
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