PTC Inc PTC is scheduled to report first-quarter fiscal 2025 results on Feb. 5.

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For the quarter, PTC anticipates revenues between $540 million and $570 million. Non-GAAP EPS is expected in the range of 75 cents to 95 cents.

The Zacks Consensus Estimate for revenues is pegged at $551.9 million, indicating an increase of 0.3% from the year-ago reported number. The consensus estimate for earnings is pegged at 91 cents per share, down 18% from the prior year. The estimate has remained unchanged in the past 30 days.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while matching the remaining one. It delivered a trailing four-quarter average earnings surprise of 9.9%. In the past year, shares of PTC have risen 9.2% compared with sub-industry’s growth of 7.4%.

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Factors Shaping PTC’s Upcoming Q1 Results

Uncertainty prevailing over global macro environment, volatile foreign currency movement and tough selling environment are likely to have acted as headwinds. Also, increasing research and development costs to fend off stiff competition in Product-Lifecycle Management (“PLM”) and Computer-Aided Design (“CAD”) space are likely to have weighed on margin performance.

Nonetheless, PTC's core business segments, CAD and PLM solutions, continue to have been major revenue drivers and are likely to have cushioned its performance in the to-be-reported quarter. Healthy adoption of its premium PLM product, Windchill software and Creo and other CAD tools among various sectors bodes well.

The increasing adoption of its Service Lifecycle Management and Application Lifecycle Management solutions, which are driven by ServiceMax and Codebeamer, respectively, is likely to have acted as additional tailwinds.

PTC’s investments in emerging technologies such as Internet of Things, Augmented Reality and Artificial Intelligence align with industry trends. Increasing recurring revenues as well as focus on go-to-market strategies are positives.

PTC Inc. Price and EPS Surprise

PTC Inc. price-eps-surprise | PTC Inc. Quote

Apart from these, the shift toward a subscription-based model and efforts to enhance operational discipline has been driving cash flow. For the fiscal first quarter, cash from operations and free cash flow are anticipated to be $234 million and $230 million, respectively.

On the last earnings call, management noted that it was realigning selling, marketing and customer resources around the key verticals, industrial products, federal, aerospace and defense, electronics and high tech, automotive and medical technology and life sciences, particularly in North America and Europe.

This realignment is aimed at improving sales efficiency, aligning better with customer needs and ultimately driving long-term revenue growth. However, PTC expects a $10 million negative impact on sequential net new ARR as couple of contracts are expected to be counted in churn in the fiscal first quarter, but will be contracted into ARR later the current fiscal year.

What Our Model Says About PTC

Our proven model does not predict an earnings beat for PTC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

PTC has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three stocks you may want to consider, as our model shows that these have the right elements to post an earnings beat in this reporting cycle.

QUALCOMM Incorporated QCOM currently has an Earnings ESP of +3.34% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

QCOM is scheduled to report quarterly earnings on Feb. 5. The Zacks Consensus Estimate for QCOM’s to-be-reported quarter’s earnings and revenues is pegged at $2.93 per share and $10.92 billion, respectively. Shares of QCOM have gained 20.1% in the past year.

Lumentum Holdings Inc. LITE presently has an Earnings ESP of +17.01% and a Zacks Rank #2. LITE is scheduled to report quarterly numbers on Feb. 6. The Zacks Consensus Estimate for LITE to-be-reported quarter’s earnings and revenues is pegged at 37 cents per share and $390.8 million, respectively. Shares of LITE have risen 52.9% in the past year.

Amazon.com, Inc. AMZN has an Earnings ESP of +4.78% and a Zacks Rank #2 at present. AMZN is scheduled to report quarterly figures on Feb. 6. The Zacks Consensus Estimate for AMZN’s to-be-reported quarter’s earnings and revenues is pegged at $1.52 per share and $187.28 billion, respectively. Shares of AMZN have increased 39.5% in the past year

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