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What's in the Offing for F5 Networks' (FFIV) Q4 Earnings?

F5 Networks' (FFIV) Q4 performance is likely to have benefited from increased demand for secured communication networks amid the COVID-19 pandemic-induced work-and-learn from home wave.

This story originally appeared on Zacks

F5 Networks FFIV is set to report fourth-quarter fiscal 2021 results on Oct 26.

- Zacks

For the fiscal fourth quarter, F5 Networks estimates revenues of $660-$680 million (mid-point $670 million). The Zacks Consensus Estimate for revenues is pegged at $673.6 million, suggesting year-over-year growth of 9.6%.

The company anticipates non-GAAP earnings of $2.68-$2.80 per share (mid-point $2.74). The Zacks Consensus Estimate is pinned at $2.77 per share, indicating a year-over-year increase of approximately 14%.

The company’s earnings surpassed estimates in all of the trailing four quarters, the average beat being 5.5%.

Let’s see how things have shaped up prior to the upcoming announcement.

F5 Networks, Inc. Price and EPS Surprise F5 Networks, Inc. Price and EPS Surprise

F5 Networks, Inc. price-eps-surprise | F5 Networks, Inc. Quote

Factors at Play

F5 Networks’ sustained focus on transitioning the business to a software-driven model is anticipated to have aided the company’s overall performance in the fiscal fourth quarter. Surging demand for multi-cloud application services is expected to have been a key growth driver during the quarter.

The company’s fiscal fourth-quarter performance is likely to have benefited from the pandemic-induced work-and-learn from home wave, which is boosting demand for secured communication networks.

Additionally, F5 Networks and NGINX’s first combined solution — Controller 3.0 — is expected to have boosted the total addressable market and deal sizes by spending more use cases across DevOps and Super-NetOps customer profiles. This is estimated to have positively impacted the company’s overall performance during the fiscal fourth quarter.

The rising traction of the Enterprise License Agreement (ELA) and annual subscriptions by customers is likely to have boosted software growth. This, in turn, is anticipated to have fueled product top-line growth. The Zacks Consensus Estimate for product revenues is pinned at $325 million, calling for an approximately 16% improvement from the year-ago reported figure of $280 million.

Furthermore, the coronavirus crisis is anticipated to have had a minimal impact on F5 Networks’ business during the fiscal fourth quarter thanks to its efficient inventory management.

However, as more and more organizations continue shifting to cloud computing owing to its maintenance-free and cost-effective nature, F5 Networks’ hardware business might have seen a declining trend during the quarter under review as well.

What Our Model Says

Our proven model does not predict an earnings beat for F5 Networks this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

F5 Networks currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.64%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Applied Materials AMAT has an Earnings ESP of +0.52% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Micro Devices AMD has an Earnings ESP of +2.31% and carries a Zacks Rank #2, at present.

CACI International CACI has an Earnings ESP of +4.43% and holds a Zacks Rank of 2, currently.

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