#$rax

Rackspace Hosting, Inc. (RAX) Information Technology - Internet Software & Services | Reports August 8, After Market Closes

Key Takeaways

The Estimize consensus is looking for earnings per share of 25 cents on $522.90 million in revenue, 3 cents higher than Wall Street on the bottom line and right in line on the top

Rackspace is advanced talks to sell its business to one or more private equity firms

Fanatical support is gaining traction in the industry announcing increasing certifications for AWS and MS Azure

What are you expecting for RAX? Get your estimate in here!

Rackspace is scheduled to report second quarter results today, after the market closes. Ahead of its report the company announced it was close to selling to one or more private equity firms. This comes two years after management said it would explore a deal in light of increasing competition in the fast growing market. The conference call on Monday will shed some light on the likelihood of the deal and its impact on future quarters. Quarterly earnings will still need to hit its numbers despite ongoing takeover talks.

The Estimize consensus is looking for earnings per share of 25 cents up 20% compared to the same period last year. That estimate has jumped 14% since Rackspace’s last report in May. Revenue is anticipated to 7% to $522.90 million, marking the second consecutive quarter of single digit growth. Shares are up 15% year to date, with a majority of that attributed to the pop from takeover talks. Cloud services have become more consolidated in recent years with big name like Google, Amazon, and Microsoft garnering the most market share. This has forced Rackspace to shift its business to more managed cloud services. The ongoing transition hasn’t had a material impact on the company’s growth prospects.

New services such as Fanatical Support have started to gain traction amongst tech giants in Amazon and Microsoft . In July the company announced that it surpassed 300 AWS certifications. The company also launched its support for Microsoft’s Azure in 2015. Considering Amazon rules the cloud space, it's encouraging that Rackspace is seeing increased customer usage. These moves open up a huge opportunity for the company to stay relevant in a saturating market.

The company has also teamed up with Google to co-design an IBM powered machine to develop new data centers. With all the efforts put forward to promote growth, investors will be looking to see what guidance Rackspace gives for Q3 on Monday. Do you think RAX can beat estimates? There is still time to get your estimate in here!

Here are some of the stocks the Yahoo Finance team will be tracking for you today.

Priceline (PCLN) stock got a nice pop in early trading. The online travel company reported better than expected second quarter earnings but revenue came in a tad shy of estimates. Profit jumped 12% from a year ago as more people used its sites to book summer vacations. Priceline also said it plans to increase spending on Facebook ads.

Kraft Heinz (KHC), the company behind Oscar Mayer, Heinz ketchup and Jell-O pudding, delivered earnings that topped analysts’ estimates for the second quarter. Profit nearly quadrupled from a year ago as it benefited from cost cuts and lower commodity prices. While revenue matched forecasts, sales were down 4.8% from a year ago.

FireEye (FEYE) shares fell in early trading. The security software firm said it plans to cut as many as 400 jobs in an effort to reduce costs and return to profitability. Revenue in the second quarter missed estimates due to a slowdown in demand for its services.

Adobe Systems Inc. (ADBE) Information Technology - Software | Reports June 21, After Market Closes

Key Takeaways

The Estimize consensus is calling for EPS of $0.70 and revenue expectations of $1.40 billion, 2 cents higher than Wall Street on the bottom line and $10 million greater on the top

Creative Cloud and Marketing Cloud products have been Adobe’s two biggest drivers as consumers transition from license based products to cloud subscriptions

Adobe’s biggest obstacles moving forward are lower end market demand, weak economic conditions and the emergence of competitor’s enterprise marketing tools

What are you expecting for ADBE? Get your estimate in here!

Over the last 2 years, Adobe (ADBE) has followed a continual upward trend, beating Wall Street on both earnings and revenue estimates in each of its last 5 quarters. Share prices have followed suit and are now up 23.31% over the last 12 months. Expectations are high that Adobe can produce another strong quarterly report, especially with the favorable year over year comparisons.

The Estimize consensus is calling for EPS of $0.70 and revenue expectations of $1.40 billion, 2 cents higher than Wall Street on the bottom line and $10 million greater on the top. On a YoY basis this predicts growth of 45% on earnings and 21% in sales. Given the recent streak of robust earnings it comes as no surprise that the company beats Estimize and Wall Street in 78% and 93% of reported quarters, respectively. Last quarter's record revenue number has good chance of being topped tomorrow thanks to strong innovations in creative and marketing cloud segments. The new age of cloud computing has been key to Adobe’s success. Currently its two biggest drivers Creative Cloud and Marketing Cloud products continue to see record adoption rates. Early indications look as if increasing booking growth will carry Q2 earnings. Digital media encompasses the company’s flagship Creative Cloud product which continues to grow close to 50% year over year. As a result digital media annualized recurring revenue (ARR) reached $3.13 billion, increasing by $246 million.

As conventional licensing software becomes a thing of the past, Adobe has seen an uptick in adoption of its creative cloud offerings. Marketing Cloud finished the last quarter with sales of $377 million, paired with strong bookings growth and significant customer adoption of SaaS-based solutions.

However, lower end market demand, significant exposure in volatile European markets, and increased competition are significant sources of concern. Earlier this year, Google introduced a new enterprise marketing tool aimed to compete with Adobe’s core products. While it is still in its early stages of development, Google’s scale and reach is enough to cause concern in the Adobe camp. Rackspace has also targeted Adobe users, offering a managed cloud service devoted to marketing leaders and technology teams. With cloud services still growing at a rapid clip, new competition is emerging out of nowhere trying to get a piece of the pie. Do you think ADBE can beat estimates? There is still time to get your estimate in here!

Each week we read dozens of transcripts from earnings calls and presentations as part of our investment process. Below is a weekly post which contains some of the most important quotes about the economy and industry trends from those transcripts. Click here to receive these posts weekly via email.

This Week’s Post: Department Store Decline

Macy's was the first department store retailer to report results for the first quarter and it set a negative tone for the industry.  It's not necessarily surprising that a brick and mortar retailer is struggling, but the extent of the deterioration did seem worse than expected.  One can't help but wonder whether the weakness is really just industry specific.

The Macro Outlook:

Macy's set a negative tone for the retail industry

"While the quarter started stronger, the business weakened considerably versus our expectations beginning in mid-March, and that trend continued through April...we are seeing weakness in consumer spending levels in apparel and related categories. The number of transactions declined 7% in the quarter, which is far worse than what was experienced last year." -Macy's CFO Karen Hoguet (Mall Retailing)

Department stores have clearly seen a meaningful and sustained deceleration in traffic

"During the first quarter, the data we received from our wholesale partners indicated a meaningful sustained deceleration in wholesale sell-throughs, not only in the United States, but also with wholesale partners in Europe. Mall traffic remains difficult, and many of our wholesale partners have announced transitions in their own businesses" -Fossil CFO Dennis Secor (Watches)

The question is whether that weakness extends beyond department stores. Macys is perplexed.

"All of us have been reading the stream of negative news stories about various retailers over the past several weeks. Clearly, our industry is in something of a rough patch. We know we are not alone. But the consumer seems to be doing okay...We’re frankly scratching our heads. We see the same economic data you all see and it would point to a customer that would be spending more." -Macy's CFO Karen Hoguet (Mall Retailing)

Lending Club saw credit quality deteriorate among its subprime borrowers

"let me start with a few comments on credit...For grades D through G, as we have previously shared, we have identified pockets of underperformance...These population segments were mainly characterized by high indebtedness and increased propensity to accumulate debt and lower credit scores." --Lending Club COO Scott Sanborn (P2P Lending)

But capital markets have opened back up

"We see there is plenty of activity now. Bond markets seem to be rather wide open. There is a lot of M&A Chatter. It's obviously far better in April and May than it was in January and February." --JP Morgan CEO Jamie Dimon (Bank)

There's still a malaise when it comes to IPOs though

"there were only eight IPOs in the quarter compared to 34 in the prior year...I would just say that I feel that sort of the malaise that surrounds the equity capital raising is still evident...I wouldn’t say there’s been a marked improvement certainly in April." -Stifel CEO Ronald Kruszewski (Investment Brokerage)

Art markets have also been challenged

"On our last earnings call, we said that we did not expect sale levels for the full year 2016 to reach the annual held levels of 2014 or 2015. And as of right now our view remains unchanged...Of course our most significant data points for the second quarter kicked off tonight, with a number of important auctions to follow in the coming days so the next two weeks should provide all of us with a lot of good market intelligence." --Southebys CEO Tad Smith (Art Broker)

Deteriorating conditions may make companies hesitant to buy back shares

"we elected not to repurchase additional shares of Hertz Global Holdings during the quarter. While we clearly believe our stock is significantly undervalued, we concluded that given the challenging revenue environment in the U.S. industry in the first quarter, it would be prudent to take a cautious stance for now." --Hertz CEO John Tague (Rental Cars)

The set of investment opportunities is lousy anyways

"We continue to face a lousy opportunity set in financial markets. Equity valuations are still rich, and interest rates are still near historic lows. Now, more than ever, some significant volatility in both equity and fixed income markets would play to our advantage." -White Mountains Managing Director Reid Campbell (Insurance)

And Steve Wynn says that the stock market is a "stupid gambling game"

"So the stock market has got more volatile, more stupid as a gambling game than ever before. And I look at it that way to be honest with you. I have very little respect for the integrity of the trading on the exchange in most stocks. And I have particular disdain for the fact that the SEC has failed to deal with high-frequency traders who are doing nothing more than taking advantage of inside information, a buy or a sell order, because of technology advantages." --Wynn Resorts CEO Steve Wynn (Casinos)

International:

The Chinese government appears to be boosting consumption

"while there still remains uncertainty in the real estate industry, we believe market conditions will be stable in the coming quarter and expect favorable government policies to continue to enjoy additional demand for our projects." -Xinyuan Real Estate CFO George Liu (Real Estate Developer)

But Chinese beer industry volumes declined by 4% in Q1

"Moving now to China, China beer industry volumes declined by around 4% in the first quarter due to economic headwinds. Our own volumes were down just over 1% in the quarter versus the tough first quarter last year, wherein our volumes grew by 4.7%." --AB Inbev CEO Carlos Brito

Weakness in Brazil is spilling over into Florida tourism

"Orlando generates about 30-or-so percent of its attendance from international guests...Brazil is the lion’s share of that when you compare it to the other countries, so it’s significant for us.  We’re seeing some softness in others, but Brazil really stands out, obviously, because of the currency, the currency difference." -Seaworld CEO Joel Manby (Theme Parks)

Financials:

The DOL's new rules for investment advisors will force the industry to evolve

"I think the industry will evolve and I think that you’re going to see manufacturers of product evolve as well, meaning that there will be more products that are available for advisory relationships because that’s certainly – make no mistake about it. The DOL rule certainly...discourages brokerage relationships." -Stifel CEO Ronald Kruszewski (Investment Brokerage)

There is a lot of focus on blockchain technology

"Blockchain continues to be an area of critical focus across all of our business lines. It seems you can’t pick up an industry publication without reading about the power and potential of blockchain technology." -Broadridge CEO Richard Daly (Information Processing)

Consumer:

Disney's studio is crushing it, but no one seems to care

"This weekend, our 2016 box office total crossed $1 billion domestically, $2 billion internationally and $3 billion globally, reaching those milestones faster than any studio in history...I’m actually kind of surprised that after almost 45 minutes of questioning, we didn’t get one question about our Studio. But I just want to reiterate that the Studio’s results were up tremendously" -Disney CEO Robert Iger (Entertainment)

Traditional consumer companies are struggling to achieve scale in technology oriented fields

"scale matters a lot in these products...we’ve got to make a lot of upfront investments in engineering costs to get product to market. That requires for each major product line over 1 million units to really reach scale" --Fossil EVP Gregory McKelvey (Watches)

"we are absolutely not pulling back our commitment to digital and omnichannel retailing. Mobile remains a very high priority, and we continue to invest." --Macy's CFO Karen Hoguet (Retail)

Technology:

Rackspace thinks that Google will be a major player in the public cloud

"Google is clearly making progress on GCP, we do think that they will end up being one of the winners in public cloud" --Rackspace CEO Taylor Rhodes (Enterprise IT)

The cost of solar installation continues to decline

"we're seeing the average selling prices of modules decline, we're seeing the same happening with inverters and then there's a couple of pretty big breakthroughs in the mounting hardware on the residential side as well as on the commercial side that will further drive down costs" -Solarcity CFO Tanguay Serra (Solar)

Industrials:

The industrial economy isn't getting much better or much worse

"From our perspective the environment continues to be uncertain with economic indicators signifying little trend movement either positive or negative.   We recognize that we cannot control microeconomic issues."  -Sun Hydraulics CEO Wolfgang Dangel (Industrial Equipment)

Companies are re-evaluating capital spending projects though

"Global economic growth for the first quarter was weak, setting up another sub-par year...For our commodity influenced businesses, we’re beginning to see clients reevaluate projects through studies and pre-feeds. Going forward, we do expect clients to continue to take a cautious, disciplined approach when they make their capital investment decisions" -Fluor CEO Dave Seaton (Construction)

Materials, Energy:

It may take $65 oil for the industry to return to growth

"We believe that in the U.S., it will take a sustained $60 to $65 oil price and 12 months of lead time for the industry to deliver a modest level of growth." -EOG Resources CEO William Thomas (Oil Producer)

The recent rise in prices is helpful, but many oil companies are no longer expecting significant improvements

"Obviously oil prices going up, commodity prices going up recently is helpful...I don’t see that having a large impact in 2016...we’re definitely trying to structure the business around this new norm realizing that oil is going to be in this range, at least based on our best guess, and we need to have our cost structure and our business operating at this price level and not expecting any significant improvements." -Clean Harbors CEO Alan McKim (Hazardous Materials Waste)

There is still a large glut of oil service equipment

"Past overinvestments and overpay- ments for acquisitions for hundreds of millions of dollars are evident today in the oilfield services industry. Several companies are faced with massive write-downs of asset values and write-offs of acquired entities, thereby destroying capital and shareholder value." --Core Labs 2016 Annual Report (Oil Service)

And some oil services competitors are acting irrationally

"The competition in some regions for jobs has become so keen that some operators are willing to take multi-year contracts at day rates that appear, to us, to be below actual running costs, particularly when factoring in surveys that will have to be undertaken during the contract term." -Seacor CEO Charles Fabrikant (Oil Services)

There will eventually have to be consolidation but how long will that take?

"Vessels (and drilling rigs) now compete for scraps of work. Most are living on a subsistence diet. Consolidation of operators and equipment is almost certainly inevitable. The question is: How much pain will precede it; how long will it take to work through the reorganizations? Cancellation of orders for new equipment is also almost certain.” -Seacor CEO Charles Fabrikant (Oil Services)

Miscellaneous Nuggets of Wisdom:

Non-GAAP accounting doesn't change reality

"Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles: How many legs does a dog have if you call a tail a leg?  The answer: four, because calling a tail a leg doesn't make it a leg." -Berkshire Hathaway CEO Warren Buffett (Conglomerate)

Competition is part of what makes capitalism work

"I am a great believer that it is a wonderful thing in America that people try to compete with each other.  It's called capitalism.  Of course companies are looking for weaknesses in banks and things they can do faster.  Business grows when they can do something better, faster, quick, or cheaper for a customer.  And if they can do better than me, so be it.  I have to learn to get better or I lose." -JP Morgan CEO Jamie Dimon (Banking)

Manage from the heart

Rackspace Hosting, Inc. (RAX) Information Technology - Internet Software & Services | Reports May 9, After Market Closes

Key Takeaways

The Estimize consensus is calling for profits of 23 cents per share on $519.80 million in revenue, 1 cent higher than Wall Street on the bottom line and right in line on the top

Rackspace recently launched its service only support for Amazon Web Services and Microsoft Azure products

Rackspace and Google plan to co-design an IBM powered machine to develop new data centers

What are you expecting for RAX? Get your estimate in here!

Despite how fast cloud computing is growing, not all players in the industry are winners. Rackspace falls within that category, with shares declining 60% over the last 12 months due to weaker growth guidance. Unfortunately this quarter is expected to be no different, with Rackspace poised to post its first quarter of single digit revenue growth in 2 years.

The Estimize consensus is calling for profits of 23 cents per share on $519.80 million in revenue, 1 cent higher than Wall Street on the bottom line and right in line on the top. Since its last report, EPS estimates have dropped 17%, but still reflecting an 18% increase from a year earlier. Revenue on the other hand is projected to increase 8%, its lowest growth rate in 2 years. The biggest problem for Rackspace and its peers is a significant revenue slowdown in the cloud computing space. Rackspace plans to spend much of the year ramping up its service only offerings and expanding its strategic partnerships. Last quarter the company launched its service only support for Amazon Web Services, Microsoft’s Azure services, and Office 365. These moves open up a huge opportunity for the company to stay relevant in a saturating market.

Furthermore, Rackspace is gaining traction in its recently launched Fanatical Support. Since its debut in October, Rackspace has already launched 100 customers. The company has also teamed up with Google to co-design an IBM powered machine to develop new data centers. With all the efforts put forward to promote growth, investors will be looking to see what guidance Rackspace gives for Q2 on Monday. Do you think RAX can beat estimates? There is still time to get your estimate in here!

Nordstrom’s stock has taken a beating over the past few months:

This stock selloff followed a major downturn in social enthusiasm among consumers in the first half of 2015 -- in other words, social-data on LikeFolio has proven to be a pretty good leading indicator for this stock.  That’s typical for retail stocks where customers are likely to tweet their purchases.

So what’s happening now, and how do we profit from it?  

Here’s a snapshot of some of the data from the free LikeFolio app we were looking at:

As you can see, social volume for the company has been on the rise lately. What you can’t see from this view is how far the volume had fallen off of late 2014 highs. Much like the stock is today, early 2015 was a bottoming process for social data in Nordstrom, and it’s just starting to look attractive again.

Social Sentiment is telling a great story-- over 90% positive mentions is phenomenal for an anchor-store retailer:

Part of this bullishness can be attributed to the new focus for Nordstrom, which is relying heavily on its Rack stores in outlet malls and, more importantly, a shift in strategy towards online sales. The Talented Blonde, a highly respected mind in retail analysis, tells us that “Hautelook and Trunk Club were really smart acquisitions for Nordstrom that give them breadth and depth,” something she says many in the “sunsetting” anchor-store industry are missing.

Bottom line?

Nordstrom may very well be in the midst of a very positive turnaround.  Social data has finally turned bullish after a year of languishing, which tells us that consumers are liking the moves the company is making.  

Bottom line:  Social data is improving for Nordstrom, and usually leads the stock by 3-6 months.  We are bullish on Nordstrom’s turnaround, and looking for entry opportunities over the next 60 days.

Tuesday, February 16

Wednesday, February 17

Thursday, February 18

What are you expecting for companies reporting this week? Get your estimates in now!

RAX (RAX)

Information Technology - Internet Software & Services | Reports February 16, after the close.

The Estimize community calls for EPS of $0.24, just one penny higher than the Wall Street consensus. Revenue estimates from Estimize are slightly more bullish as well, at $522.7M vs. the Street’s $521.7M and guidance of $485.4M.

What to Watch: Despite how fast cloud computing is growing, not all players in the industry are winners. That's something Rackspace needs to consider as shares of the company have fallen a resounding 65% in the past the past 12 months. The cloud computing specialist has struggled to maintain growth while heavy hitters like Google, Microsoft and Amazon take the industry by storm. Just this year, Amazon and Microsoft cut prices of their flagship cloud products, partly explaining the 30.4% drop in Rackspace’s stock year-to-date. To avoid getting squeezed out by the competition, Rackspace has focused on investments in its services. The company recently launched “fanatical support”, an around the clock managed support service dedicated to serving Amazon Web Services and Azure customers. Rackspace is also targeting Adobe users, offering a managed cloud service devoted to marketing leaders and technology teams. The service aims to optimize solutions surrounding websites and mobile apps on Adobe Experience Manager. In the short-term, these investments into managed solutions as well as additional data centers and servers are expected to put pressure on Rackspace’s bottom-line. Read more about RAX!

Fossil (FOSL)

Consumer Discretionary - Textiles, Apparel & Luxury Goods | Reports February 16, after the close.

The Estimize community calls for EPS of $1.36, 7 cents higher than Wall Street while revenue estimates of $924.9M vs. $919.25M, both below company guidance.  

What to Watch: Fossil is coming off a year which saw share prices fall 67% due to a decline in its portfolio of licensed brands, weaker watch sales, and sluggish international performance from currency headwinds. Despite all of these headwinds, Fossil has beat on the bottom line each quarter of 2015 and historically has beat the Estimize EPS consensus 63% of the time. Growth of Fossil’s flagship product, watches, turned negative in 2015 for the first time in 5 years, due to a weakened portfolio of licensed brands and market saturation. Slower demand for Michael Kors products has played a large role in Fossil’s sales decline. The Kors brand represents roughly 25% of Fossil’s revenue and has contributed to almost 50% of the company’s sales growth in the past 5 years. Moreover, Fossil recently announced it will be parting ways with Burberry in December 2017. The company’s biggest threat comes from the increased prevalence of tech accessories including smartwatches and activity trackers. As a result the company is adjusting its strategy by leaning on investments in smart accessories to revive growth and capture a share of the robust wearables market. Last quarter,  Fossil rolled out a line of Fossil branded watches in partnership with Google and Intel, they also recently acquired Misfit, a producer and manufacturer of wearables. Read more about FOSL!

Priceline (PCLN)

Consumer Discretionary - Internet & Catalog Retail | Reports February 17, before the open.

The Estimize consensus is calling for EPS of $11.97 as compared to Wall Street’s consensus of $11.83, and guidance for $11.50. Revenues currently stand at $1.988B, are a bit higher than the Street’s consensus of $1.977B, and guidance of $1.923B.

What to watch: Last quarter Priceline impressively beat the Wall Street EPS consensus by almost $1.00, and revenues of $3.103B surpassed both Estimize and Wall Street by more than $25M. This is including FX headwinds that slashed gross travel bookings growth by 15 percentage points! However, that wasn’t enough to excite investors, who were more focused on reduced Q4 guidance which sent the stock tumbling. Overall, Priceline remains dominant against direct competitors such as Expedia and TripAdvisor, but they are starting to see stiff competition from vacation rental sites such as Airbnb. Priceline owned booking.com rivals all other sites in the space, but the company still lags behind Expedia in the US. Despite a weakened economy in China, Priceline sees huge potential there, as the expanding Chinese middle class has led to increased travel. The company recently upped their bet on the region by making a 10% investment in Ctrip.com, China’s leading online travel booking site. China hasn’t seen a maturing of the online travel market like Europe and the US, leaving room for exponential growth. Priceline’s high exposure to international markets is not only worrisome due to currency headwinds, but terror attacks in Europe have lead to less travel there.

Wal-Mart (WMT)

Consumer Staples - Food & Staples Retailing | Reports February 18, before the market opens.

The Estimize community calls for EPS of $1.45, one penny lower than Wall Street. Revenue expectations of $130.513B are greater than the Street’s consensus of $130.461B.

What to Watch: Anyone that follows the Estimize consensus knows that it’s pretty rare when our community’s expectations are below Wall Street. This happens to be the case with Wal-Mart’s EPS estimate, and it should be taken as a bearish signal. While revenue estimates are more in-line, they have fallen by almost $1B in the last 3 months. This quarter it is expected to post a 10% decline in EPS YoY, with revenues estimated to fall 1%. Declining expectations have to do with guidance Walmart gave in October, lowering FY 2015 guidance and claiming YoY sales growth would be flat due to wage hikes and FX headwinds, but most investors took it as a sign that competition from Amazon was the most likely culprit. The world’s largest retailer recently announced that it would be closing 270 stores in the U.S. and overseas, stores closing represent less than 1% of Walmart’s worldwide sales. Despite store closures, Walmart plans to open over 300 new stores in fiscal 2017, including 50 to 60 supercenters. Beyond brick and mortar, Wal-Mart is looking to develop a digital relationship with customers through the launch of Wal-Mart Pay, the first step in their e-payment strategy.

Nordstrom (JWN)

Consumer Discretionary - Multiline Retail | Reports February 18, after the close.

The Estimize community calls for EPS of $1.22, in-line with Wall Street. Revenue expectations from Estimize of $4.23B are also in line with the Street.

What to Watch: For the fourth quarter, analysts are projecting Nordstrom’s EPS will decline 7%, while sales will grow 8%. This would be the 5th consecutive quarter of EPS declines, after a huge miss in Q3, while revenue growth has actually been relatively strong in 2015, coming in at 13%, 12% and 7% for the first three quarters of the year.  However, it’s important to keep in mind that JWN only beats on revenue expectations 21% of the time, one of the lowest beat rates for a company of this size. Of the department stores, Nordstrom is considered higher-end, a hard spot to sit as the US consumer becomes more value-focused and less willing to spend on apparel. While same store sales were strong in the first half of the year, coming in at 4.4% and 4.9% in Q1 and Q2, outpacing many of its competitors, they dropped to 0.9% in Q3. A large part of the company’s success during the first half of the year can be attributed to Nordstrom Rack, Nordstrom’s discount store. That segment saw sales grow 8.4% in Q3, ending a 26 quarter streak of double-digit growth. Other initiatives such as the launch of Nordstromrack.com, entry into Canada and the acquisition of Trunk Club drove a third of total sales growth in the latest quarter and are expected to do so again in the fourth quarter.

Do you agree with the Esitmize community on these names? Be sure to get your estimates in now!

Rackspace Hosting, Inc. (RAX) Information Technology - Internet Software & Services | Reports February 16, After Market Closes

Key Takeaways

The Estimize consensus is calling for EPS of 0.24, 1 cent higher than Wall Street, and revenue expectations of $522.77 million, roughly $1 million above the Street

Rackspace’s biggest threat is stiff competition at the top from Amazon, Google, and Microsoft

Industry leader, Amazon, has remained aggressive on the pricing front, putting additional pressure on Backspace’s earnings

What are you expecting for RAX? Get your estimate in here!

Despite how fast cloud computing is growing, not all players in the industry are winners. That's something Rackspace needs to consider as shares of the company have fallen a resounding 65% in the past the past 12 months. The cloud computing specialist has struggled to maintain growth while heavy hitters like Google, Microsoft and Amazon take the industry by storm.

Consequently, expectations are muted for Rackspace’s fourth quarter earnings which will be released February 16, after the market closes. The Estimize consensus is calling for EPS of 0.24, 1 cent higher than Wall Street, and revenue expectations of $522.77 million are roughly $1 million above the Street. Compared to Q4 2014, this represents a projected YoY decline on the bottom line of 3%, while revenue is expected to grow 11%. Despite modest top line growth, stiffer competition continues to weigh heavily on margins. Just this year, Amazon and Microsoft cut prices of their flagship cloud products to solidify their stance against other major cloud computing suppliers. As you would suspect, Rackspace’s stock reacted negatively to the news, dropping 30.4% since the start of the year. To avoid getting squeezed out by the competition, Rackspace has focused on investments in its services. The company recently launched “fanatical support”, an around the clock managed support service dedicated to serving Amazon Web Services and Azure customers. In the short term, this is expected to offset slumping growth in the overall business, but is not viewed as a long term solution.

Rackspace has also targeted Adobe users, offering a managed cloud service devoted to marketing leaders and technology teams. The service aims to optimize solutions surrounding websites and mobile apps on Adobe Experience Manager. In the meantime, these investments into managed solutions as well as additional data centers and servers are expected to put pressure on Rackspace’s earnings. Do you think RAX can beat estimates? There is still time to get your estimate in here!