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VASCO (VDSI) Q3 Earnings: What Lies Ahead for the Stock?

Leading security software firm VASCO Data Security International Inc. VDSI is scheduled to report third-quarter 2017 results after the closing bell on Oct 26. The company has a solid earnings surprise history, beating estimates twice in the trailing four quarters with a positive average earnings surprise of 183.3%.

Let’s see how things are shaping up for this announcement.

Key Factors to Consider

VASCO is continuing with its pursuit to develop innovative products that significantly reduces the risk of losses due to fraud and data theft. The trusted identity strategy of VASCO products provides enhanced data security with adaptive authentication. In addition, the company is drawing on the in-house cloud expertise gained through the acquisition of eSignLive to develop the cloud-based elements of IDENTIKEY Risk Manager and trusted identity solutions. At the same time, VASCO is expanding eSignLive's growth opportunities by integrating it with popular cloud-based services.

The new trusted identity solutions enable the integration of multiple anti-fraud capabilities in a more unified manner while easing implementation and administration. These investments are likely to translate into incremental revenues for the company in the to-be-reported quarter.

VASCO expects the long-term shift toward software and services to continue in the quarter. However, the company expects to record valuable contributions from its hardware business with a solid pipeline of business opportunities. VASCO is likely to continue aligning its resources with growth opportunities and enhance ability to develop innovative solutions that identify and mitigate online and mobile threats. With a change in top management and focused approach, the company is likely to report healthy top-line growth in the third quarter.

Earnings Whispers

Our proven model does not conclusively show that VASCO is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: VASCO has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

KEMET Corporation KEM has an Earnings ESP of +7.46% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franklin Resources, Inc. BEN has an Earnings ESP of +0.56% and a Zacks Rank #2.

Applied Materials, Inc. AMAT has an Earnings ESP of +0.37% and a Zacks Rank #2.

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VASCO Data Security International, Inc. (VDSI): Free Stock Analysis Report
Kemet Corporation (KEM): Free Stock Analysis Report
Franklin Resources, Inc. (BEN): Free Stock Analysis Report
Applied Materials, Inc. (AMAT): Free Stock Analysis Report
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