Yahoo Finance EPAM Systems (EPAM) to Report Q4 Earnings: What's in Store?
EPAM Systems EPAM is scheduled to report fourth-quarter 2022 results on Feb 16.
In the last reported quarter, the company delivered an earnings surprise of 23%. EPAM surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 26.6%.
For the fourth quarter, the company estimates reporting GAAP revenues between $1.22 billion and $1.23 billion, suggesting year-over-year growth of at least 11% at the midpoint. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.23 billion.
EPAM projects non-GAAP earnings in the band of $2.62-$2.70 per share for the to-be-reported quarter. The consensus mark for earnings stands at $2.68 per share, indicating a decrease of 2.9% from the $2.76 reported in the year-ago period.
EPAM Systems, Inc. Price and EPS Surprise
EPAM Systems, Inc. price-eps-surprise | EPAM Systems, Inc. Quote
Factors to Note Ahead of Q4 Earnings
EPAM’s fourth-quarter performance is likely to have benefited from the strong demand for its services, driven by accelerated digital modernization across several industries in a continued response to economic changes post-COVID-19.
Furthermore, acquisitions over the past 12 months, including S4N, Emakina Group, Optiva Media and ENGINIETY, are likely to have contributed to the company’s top line in the to-be-reported quarter. EPAM expects acquisitions to contribute approximately 1% to fourth-quarter revenues. Management anticipates the non-GAAP operating margin to be 16-17%.
However, unfavorable currency exchange rates are likely to have hurt the top line in the fourth quarter. EPAM forecasts foreign currency translation to have a negative impact of 4% on total fourth-quarter revenues.
Additionally, EPAM’s fourth-quarter performance is likely to have been impacted by the discontinuation of its business in Russia following the Kremlin forces’ invasion of Ukraine. The company had significant exposure in the region, with most of its delivery centers in Central and Eastern Europe (“CEE”), now diversified across other regions. The company forecast that the exit from the Russian market is likely to hurt fourth-quarter revenues by approximately 5%.
In the fourth quarter of 2021, revenues from CEE were $55.2 million (accounting for 5% of the total revenues). However, the ongoing conflict is likely to have hurt the company’s revenues and profitability from this region. Our estimates suggest that the region will generate $12.1 million in revenues and contribute 1% to the company’s overall top line.
In fiscal 2021, EPAM generated $168 million of revenues from CEE, accounting for 4.5% of the total revenues. Our estimates suggest that the region will generate $75.7 million in revenues in 2023 and contribute 1.6% to the company’s overall top line.
What Our Model Unveils
Our proven model does not conclusively predict an earnings beat for EPAM 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. However, that’s not the case here.
EPAM currently carries a Zacks Rank of #3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Vipshop Holdings VIPS, Cisco Systems CSCO and Applied Materials AMAT have the right combination of elements to post an earnings beat in their upcoming releases.
Vipshop sports a Zacks Rank #1 and has an Earnings ESP of +1.01%. The company is expected to report fourth-quarter 2022 results on Feb 22. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 20.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vipshop’s fourth-quarter earnings stands at 50 cents per share, implying a year-over-year increase of 22%. It is estimated to report revenues of $4.52 billion, which suggests a decline of 15.6% from the year-ago quarter.
Cisco carries a Zacks Rank #3 and has an Earnings ESP of +1.66%. The company is slated to report second-quarter fiscal 2023 results on Feb 15. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 2.1%.
The Zacks Consensus Estimate for CSCO’s fiscal second-quarter earnings is pegged at 86 per share, indicating a year-over-year increase of 2.4%. The consensus mark for revenues stands at $13.43 billion, suggesting a year-over-year increase of 5.6%.
Applied Materials is slated to report first-quarter fiscal 2023 results on Feb 16. The company has a Zacks Rank #3 and an Earnings ESP of +0.42% at present. AMAT’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 6.8%.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.93 per share, suggesting an increase of 2.1% from the year-ago quarter’s earnings of $1.89. Applied Materials’ quarterly revenues are estimated to increase 6.6% year over year to $6.69 billion.
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