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This week we get earnings reports from a Q2 straggler and an early Q3 release from names in the tech space.
Verifone and Box have seen their stocks suffer in 2016. While Box is beginning to show improvements heading into its report, Verifone is still struggling, and has seen massive downward revisions to earnings and revenue expectations.
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Payment processor Verifone is scheduled to report fiscal third-quarter earnings on Wednesday, one of the first Q3 reports of the season. The company is best known for payment terminals found at a large portion of retailers worldwide.
Its industry lead as a provider of electronic payment solutions has proved favorable for earnings, with the exception of last quarter, which showed a surprising miss of 7 cents on the bottom line, and growth that dropped out of the double digits. Those results kicked off a multimonth sell-off of the stock, which is now down more than 29 percent this year.
Currently the crowd is not looking for a rebound. EPS is expected to come in at 42 cents, a cent higher than Wall Street's forecast, which would show a 3 percent decline year-over-year and the first decline in over eight quarters. Revenues are slated to come in at $515.09 million, even lower than the sell-side expectation of $515.44 million, but still in positive growth territory at 2 percent.
Both of these metrics have been falling since the last quarterly report, with EPS expectations down 32 percent and revenues down 6 percent.
Verifone's main issues lie in the large declines it's seen in Asian and Latin American markets, which should persist into Q3. Competition in these rapidly growing markets have put pressure on margins and revenue, and volatile forex headwinds haven't helped.
In addition, the slow pace of many retailers to update their point-of-service systems to accept EMV chip cards has also come at the expense of Verifone's bottom line. The company was expecting faster adoption rates following a deadline in October that officially shifted the liability for fraudulent charges to businesses as opposed to card issuers or banks. All of these concerns caused the tech company to lower fiscal 2016 guidance last quarter.
In contrast, cloud storage services provider Box may put up decent results. In February of this year, Box saw shares slide to $9. Since then, they have recovered to the $13 range, but are still down more than 4 percent year to date.
Box operates in the very volatile enterprise tech space. Many of these names consistently post strong earnings and revenue growth but have watched share prices plummet. The primary cause of sinking share prices has been decelerating growth and weak forward guidance.
For Box, the crowd is expecting an earnings per share loss of 18 cents, just one cent better than Wall Street anticipates. Revenues are also slightly higher at $95.2 million versus the sell side's consensus of $94.65 million. Both metrics are expected to post impressive year-over-year growth of 33 percent and 29 percent, respectively, with EPS estimates inching up by 6 percent since the last report. However, shares tend to plummet by 10 percent on average in the 30-day post-earnings period.
Box continues to position itself in new ventures, including security and administrative technology, which put it in a favorable position to gain from the increasing adoption of cloud computing technologies. The company's partnerships and cross-selling opportunities should bode well in the near future. However, continuous investments into sales personnel and new technologies could continue to take its toll on margins and profits.
How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!