PCM (PCMI) To Post Q1 Earnings: Factors To Influence Results
Zacks Investment Research | Apr 22, 2019 04:27AM ET
PCM Inc. (NASDAQ:PCMI) is set to report first-quarter 2019 results on Apr 25.
Notably, the company’s earnings have beaten the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 27.4%.
In the last reported quarter, the top line benefited from focus on security and collaboration solutions. PCM’s strategy of exiting non-core low-margin volume business also boosted its profitability.
The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $548 million, which indicates growth of almost 1% from the year-ago quarter’s reported figure. Moreover, the consensus mark for earnings has remained steady at 40 cents over the past 30 days.
Let’s see how things are shaping up prior to this announcement.
Key Factors to Watch Out
PCM is likely to benefit from focus on higher-margin sales in areas like managed services, advanced technologies and cloud and security solutions. The company continues to exit non-core less profitable areas, which is a key catalyst.
However, focus on higher-margin sales is likely to hurt top-line growth in the first quarter, which is seasonally PCM’s slowest quarter in terms of sales and profitability.
Moreover, sluggishness in the U.K. market, primarily due to Brexit-related headwinds, is anticipated to negatively impact growth.
Further, PCM generates significant revenues from federal contracts. Hence, the U.S. government shutdown doesn’t bode well for the company’s to-be-reported quarter.
Additionally, higher mix of low-margin federal contracts is expected to negatively impact gross margin despite stringent cost control.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive the complete list of today’s Zacks #1 Rank stocks here .
Charter Communications (NASDAQ:CHTR) has a Zacks Rank #3 and an Earnings ESP of +5.33%.
Take-Two Interactive (NASDAQ:TTWO) has an Earnings ESP of +7.94% and a Zacks Rank #3.
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