Qihoo 360 Technology Co. Ltd. QIHU is set to release the first-quarter 2015 results on May 19. Last quarter, Qihoo delivered a positive earnings surprise of 5.56%. The company has delivered positive surprises in three of the last four quarters, with an average positive surprise of 4.05%.  Let’s see how things are shaping up for this announcement.

Factors to Consider

Qihoo posted solid fourth-quarter results with both revenues and earnings improving on a year-over-year basis and surpassing the Zacks Consensus Estimate. Qihoo has been solidifying its position as the undisputed leader in the Chinese Internet market with its PC security products covering nearly 95% PC Internet users and the mobile security solutions catering to approximately 70% of smartphone users of the nation.

Last year, the company entered into a joint venture (JV) with Coolpad Group Limited for the development and distribution of mobile terminal products. The JV will offer smartphones under the China-based e-Commerce smartphone brand, Dazen.

Going forward, Qihoo plans to invest in product development and technology innovation as well as expansion of PC and mobile Internet coverage, going forward. Its consistent focus on Internet and product innovation has been the cornerstone of success and will remain a key growth driver in the first quarter of 2015.

However, with intensifying competition, Qihoo’s prospects might be marred if it fails to expand and innovate its products in keeping with consumers’ changing tastes and preferences. Also, stiff competition from key players like Sohu.com Inc. SOHU and Baidu, Inc. BIDU may pose a headwind, going forward.

Earnings Whispers

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

Zacks ESP: Qihoo has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 34 cents per share.

Zacks Rank: Qihoo’s Zacks Rank #3 (Hold), when combined with a 0.00% ESP, makes surprise predictions difficult.

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

Stock to Consider

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

Intuit Inc. INTU, with an Earnings ESP of +2.34% and a Zacks Rank #2 (Buy).

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SOHU.COM INC (SOHU): Free Stock Analysis Report
 
BAIDU INC (BIDU): Free Stock Analysis Report
 
INTUIT INC (INTU): Free Stock Analysis Report
 
QIHOO 360 TECH (QIHU): Free Stock Analysis Report
 
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