Bear Of The Day: MongoDB (MDB)
MongoDB $MDB (MDB) is a Zacks Rank #5 (Strong Sell) although it recently beat the Zacks Consensus Estimate. The stock has a Zacks Style Score for Value and an A for Growth. This article will examine why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
MongoDB (MDB) engages in the development and provision of a general purpose database platform. The company’s products include MongoDB Advanced business, MongoDB Atlas and community server. It also offers professional services including consulting and training. The company was founded by Eliot Horowitz, Dwight A. Merriman, Kevin P. Ryan and Geir Magnusson Jr. in November 2007 and is headquartered in New York, NY.
When I look at a stock, the first thing I do is see if the company is beating the number. This shows me right away where the market’s expectations of the company are and how management has communicated with the market. A stock that beats consistently has management communicating to Wall Street what expectations can be achieved. This is what you want to see.
In the case of MongoDB (MDB) I see that the company has beaten the Zacks Consensus Estimate in each of the last four quarters. That alone doesn’t make the stock a Zacks Rank #1 (Strong Buy) nor does it make it a Zacks Rank #5 (Strong Sell).
The Zacks Rank cares about earnings history, but it is much more heavily influenced by changing earnings estimates.
The most recent earnings report from MongoDB (MDB) saw the company post EPS of $1.65 compared to the Zacks Consensus Estimate of $1.47. This 18 cent beat translates to a positive earnings surprise of 12.2%.
Earnings Estimate Revisions
The Zacks Rank tells us which stocks are seeing their earnings estimates rise, or in this case, fall. For MongoDB (MDB) I see the annual estimates for next year increasing lately.
The consensus figure for the current fiscal year has risen from $5.61 to $5.83 over the past 60 days.
The next fiscal year also projects estimates rising from $6.83 to $6.94 over the past 60 days.
Negative moves in earnings estimates are the main reason this stock has a Zacks Rank #5 (Strong Sell). That said, the Agreement section can sometimes drag down the rankings if there is a significant gap. In the case of MongoDB (MDB) current quarter has seen 6 estimate decreases and 3 estimate increases over the past 60 days.
It’s worth noting that many stocks in the Zacks universe are experiencing negative earnings estimate revisions. This means that stocks experiencing small but negative earnings estimate revisions fall to a Zacks Rank #5 (Strong Sell).
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