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What to expect ahead of Sonos’ third quarter earnings release (SONO)

Sonos Inc. SONO is due to release its third quarter fiscal 2022 results on August 10.

For the third fiscal quarter, Zacks’ consensus estimate for revenue is pegged at $428.3 million, indicating a 13.1% year-over-year increase.

Zacks’ consensus estimate for quarterly earnings is pegged at 6 cents per share, suggesting a 77.9% year-over-year decline.

The company’s earnings have exceeded the Zacks consensus estimate for the past four quarters, with the average surprise coming in at 124.4%.

In the most recently reported quarter, Sonos reported non-GAAP earnings of 26 cents per share in the second quarter of fiscal 2022, down 16.1% year on year. Quarterly revenue increased 20.1% (up 22.8% in constant currency) year over year to $399.8 million.

Let’s see how things went for the upcoming announcement.

Sonos, Inc. Price and EPS Surprise

Sonos, Inc. price-eps-surprise | Sonos, Inc. Quote

Factors at play

Sonos should have benefited from an environment of strong demand, especially for its high-end products. Sonos focused on its three strategic initiatives: expanding its brand, strengthening its offerings and driving operational excellence. This likely helped to expand revenue and margins.

New product launches are likely to act as a tailwind. Beam Gen 2 was the first product launched in fiscal year 2022, which is the latest generation of the industry-leading compact smart soundbar for TV, music, games and more. The new Beam features a redesigned and updated sound experience with more depth and clarity, as well as support for Dolby Atmos. In May 2022, Sonos announced Sonos Ray and three new colors for Sonos Roam. The company has also rolled out Sonos Voice Control, which allows users to control the Sonos system using only their voice.

The continued traction seen for new products such as Roam and Sonos Radio HD, as well as partnerships with companies such as Audi and IKEA, likely helped the company in the quarter under review.

In April 2022, the company also acquired Dutch company Mayht Holding BV for nearly $100 million in an all-cash deal. Mayht specializes in manufacturing revolutionary audio transducers. Transducers are a device inside the loudspeaker that generates sound. Mayht has been working on advancing transducer technology to enable smaller and lighter form factors without affecting quality, Sonos added.

However, weak global macroeconomic conditions, ongoing supply chain and logistics issues and component shortages are expected to have hampered margin expansion. Rising operating costs were another headwind, reflecting increased spending on research and development and sales and marketing.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Sonos this time around. The combination of a positive Earnings ESP and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating Earnings.

Sonos has an ESP of 0.00% earnings and a Zacks #4 (sell) rating. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Actions to Consider

Here are a few companies you might want to consider, as our model shows they have the right combination of elements to post higher earnings this quarter:

Hyatt Hotels Corporation H has an ESP of +216.67% and Zacks rank #3 currently. Hyatt Hotels is expected to release its results on August 9. You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks Consensus’ estimate for Hyatt Hotels’ reportable quarterly loss per share and revenue is set at 1 cent per share and $1.36 billion, respectively. Shares of Hyatt hotels have climbed 14.6% over the past year.

Dolby Laboratories DLB has an ESP profit of +5.00% and a Zacks rating of 3. Dolby is expected to announce quarterly numbers on August 9.

Zacks’ consensus estimate for Dolby’s reportable quarter earnings and revenue is pegged at 60 cents per share and $295.2 million, respectively. Dolby has exceeded earnings estimates in the previous three out of four quarters, with the average surprise being 14.7%. DLB shares have lost 20% over the past year.

Keysight-Technologies KEYS has a +1.23% earnings ESP and a #2 Zacks rank currently. KEYS is expected to release its quarterly figures on August 17.

Zacks’ consensus estimate for KEYS’ quarterly earnings and revenue is set at $1.79 per share and $1.34 billion, respectively. Keysight has exceeded earnings estimates in the previous four quarters, with the average surprise being 8%. KEYS shares have gained 0.2% over the past year.

Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.