Will LinkedIn Corp (LNKD) Disappoint This Earnings Season?

LinkedIn Corp (NASDAQ:LNKD) is set to report fourth-quarter fiscal 2013 results on Feb 6. Last quarter, the company posted a negative earnings surprise of 100.0%. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

LinkedIn delivered mixed third-quarter results. Although, the company’s top line surpassed the Zacks Consensus Estimate, the bottom line missed the consensus mark. Year-over-year revenues benefited the most from growth in its Talent Solution and Premium Subscription businesses.

Additionally, LinkedIn is gaining traction on the mobile and tablet platforms, which are expected to generate additional revenues. The company is expected to continue its investments in the near term, which might impact its profitability.

Moreover, we believe that LinkedIn’s rapid growth and new product rollouts could lead to poorer service levels. Also, there is a possibility that companies like Facebook Inc. (FB), Microsoft (MSFT) and Twitter will develop competing solutions and enter this adjacent market.

The emergence of companies likes ValueClick Inc., which have been introducing new services at regular intervals, could also bring about a rapid change in the scenario.

Earnings Whispers?    

Our proven model does not conclusively show that LinkedIn will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 9 cents. Hence, the difference is 0.00%.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here is another company which investors may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter:

ON Semiconductor Corp. (ONNN), Earnings ESP of +14.29% and a Zacks Rank #2 (Buy).

FACEBOOK INC-A (FB): Free Stock Analysis Report

LINKEDIN CORP-A (LNKD): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

ON SEMICON CORP (ONNN): Free Stock Analysis Report

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About the Author

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were audited and attested by Baker Tilly, an independent accounting firm.

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