GDS Holdings (GDS) reports first-quarter loss, delays revenue estimates

GDS Holdings (GDS) came out with a quarterly loss of $0.27 per share compared to the Zacks Consensus Estimate of a loss of $0.33. For comparison, a year earlier the loss was $0.40 per share. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of 18.18%. A quarter ago, it was expected that this company would post a loss of $0.39 per share when it actually produced a loss of $0.62, delivering a surprise of -58.97%.

The company has topped consensus EPS estimates three times over the last four quarters.

GDS Holdings, which belongs to the Zacks Technology Services industry, posted revenues of $363.89 million for the quarter ended March 2024, missing the Zacks Consensus Estimate by 0.83%. For comparison, revenues from a year ago amounted to $350.77 million. The company has failed to beat consensus revenue estimates over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

GDS Holdings shares are up about 2% year-to-date compared to the S&P 500’s gain of 11.6%.

What’s next for GDS Holdings?

While GDS Holdings has underperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of the earnings release, the estimate revision trend for GDS Holdings is mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is -$0.29 on revenue of $387.6M for the coming quarter and -$1.18 on revenue of $1.59B for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Technology Services is currently in the top 24% of over 250 Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Allot Communications (ALLT), another company in the same industry, is yet to release results for the quarter ending March 2024. The results are expected to be released on May 29.

The Internet protocol services company is expected to report quarterly loss of $0.10 per share in its upcoming report, representing a year-over-year change of +52.4%. The consensus EPS estimate for the quarter has not changed over the last 30 days.

Allot Communications’ revenue is expected to be $19.1 million, down 9.6% from the year-ago quarter.

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