NetApp NTAP is slated to release second-quarter fiscal 2022 earnings on Nov 30.

The company anticipates non-GAAP earnings for second-quarter fiscal 2022 between $1.14 and $1.24 per share. The Zacks Consensus Estimate for earnings is at $1.22 per share, suggesting an improvement of 16.2% from the year-ago quarter’s reported figure.

The company expects net revenues in the range of $1.49-$1.59 billion. The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at $1.55 billion, suggesting growth of 9.2% year over year.

The company beat estimates in all of the last four quarters. It has a trailing four-quarter earnings surprise of 20%, on average.

Shares of NetApp have surged 68.6% in the past year compared with the industry's return of 49.8%.

NetApp, Inc. Price and EPS Surprise

NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote

Factors to Note

Globally, rapid cloud migration and digital transformation initiatives by enterprises are fueling demand for cloud-based storage. Continuation of work from home, hybrid work innovation and recovery in enterprise markets are other driving factors.

These factors are likely to have driven the adoption of NetApp’s hybrid multi-cloud offerings, cloud data services and private cloud offerings as well as positively impacted the top line.

Strength in the company’s all-flash business is expected to have contributed to the Hybrid Cloud segment’s revenues in the to-be-reported quarter. Software product revenues are likely to have gained from the favorable mix shift to all-flash portfolio.

Increasing clout of Spot by NetApp portfolio — which facilitates enterprises to make multi-cloud management easier and lower expenses— might have aided Public Cloud services business. Cloud Volumes and Cloud Insights services are also likely to have driven the company’s Public Cloud services business.

Healthy uptake of Azure NetApp Files is anticipated to have bolstered Public Cloud Services business’ annualized recurring revenues (ARR) in the fiscal second quarter. Public Cloud Services recorded an ARR of $337 million, up 89% year over year and 12% quarter over quarter in the last reported quarter.

Continued momentum witnessed in the company’s HCI (or hyper converged infrastructure) and cloud collaborations with the likes of Azure platform and Google Cloud might have acted as tailwinds.

Synergies from the buyouts of Data Mechanics, Cloud Jumper and Talon are likely to have driven the company’s performance.

Incremental gains from an uptick in the company’s NetApp Astra solution and NetApp ONTAP data management software might have had favored the top line. In the fiscal first quarter, the company unveiled ONTAP 9.9 with advanced security features along with integrated data protection functionalities among others.

NetApp Astra provides application-aware data management designed for Kubernetes workloads, while NetApp ONTAP data management software helps organizations accelerate digital transformation, optimize costs and improve security.

In the last reported quarter, NetApp rolled out Keystone Flex Subscription 2.1 to boost its uptake of its Storage-as-a-Service solution and streamline hybrid cloud consumption and operations.

Increasing expenditures amid competition from fellow storage peers might have limited margin expansion in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

NetApp has an Earnings ESP of 0.00 % and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

AutoZone AZO has an Earnings ESP of +2.68% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone is set to report first-quarter fiscal 2022 results on Dec 7. The Zacks Consensus Estimate for earnings is pegged at $20.65 per share, which suggests an increase of 11% from the prior-year quarter’s reported figure.

Shares of AutoZone have rallied 65.7% in the past year compared with the Zacks Automotive- Retail and Wholesale -parts industry’s rise of 51.5%.

Lululemon Athletica LULU has an Earnings ESP of +1.44% and a Zacks Rank of 2 at present.

Lululemon Athletica is scheduled to release third-quarter fiscal 2021 results on Dec 9. The Zacks Consensus Estimate for earnings is pegged at $1.39 per share, which suggests an increase of 19.8% from the prior-year quarter’s levels.

Shares of Lululemon Athletica have surged 25.3% in the past year compared with the Zacks Textile Apparel industry’s rise of 24.1%.

PVH Corporation PVH has an Earnings ESP of +1.61% and a Zacks Rank of 2.

PVH is scheduled to release third-quarter fiscal 2021 results on Dec 1. The Zacks Consensus Estimate for earnings is pegged at $2.07 per share, indicating an increase of 56.8% from the year-ago quarter’s tally.

Shares of PVH have rallied 41% in the past year compared with the Zacks Textile Apparel industry’s rise of 24.1%.

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