Digital River Earnings Preview

Investors hope Digital River (Nasdaq: DRIV  ) will top analyst estimates once again after beating predictions by $0.01 in the previous quarter. The company will unveil its latest earnings Thursday. Digital River provides end-to-end global e-commerce and marketing solutions to a variety of companies in software, consumer electronics, computer games, video games, and other markets.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Digital River with eight of 15 analysts rating it hold. Analysts don't like Digital River as much as competitor Premiere Global Services overall. Five out of five analysts rate Premiere Global Services a buy compared with seven of 15 for Digital River. While analysts still rate the stock a hold, they are a little more optimistic about it compared with three months ago.
• Revenue Forecasts: On average, analysts predict $94 million in revenue this quarter. That would represent a rise of 10.6% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.13 per share. Estimates range from $0.11 to $0.14.

What our community says:
CAPS All-Stars are solidly backing the stock with 95.4% giving it an "outperform" rating. The community at large agrees with the All-Stars with 93.8% assigning it a rating of "outperform." Fools are bullish on Digital River and haven't been shy with their opinions lately, logging 108 posts in the past 30 days. Even with a robust four out of five stars, Digital River's CAPS rating falls a little short of the community's upbeat outlook.

Management:

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q2	Q1	Q4	Q3
Gross Margin	82.3%	82.9%	83.1%	81.5%
Operating Margin	0%	10.0%	8.1%	2.9%
Net Margin	0.3%	7.1%	5.5%	6.9%

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