After beating estimates last quarter by $0.04, Digital River (Nasdaq: DRIV) has set the standard for itself. The company will unveil its latest earnings on Thursday, July 28. 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 generally think investors should hang on to Digital River, with half rating the stock a hold. Analysts don't like Digital River as much as competitor Akamai Technologies overall. Eleven out of 21 analysts rate Akamai Technologies a buy, compared with nine of 18 for Digital River.
  • Revenue forecasts: On average, analysts predict $92.3 million in revenue this quarter. That would represent a rise of 12.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.04 per share. Estimates range from $0.02 to $0.05.

What our community says:
CAPS All-Stars are solidly backing the stock, with 95.7% granting it an "outperform" rating. The community at large concurs with the All-Stars, with 92.6% awarding it a rating of "outperform." Fools are keen on Digital River and haven't been shy with their opinions lately, logging 104 posts in the past 30 days. Despite the majority sentiment in favor of Digital River, the stock has a middling CAPS rating of three out of five stars.

Management:
Revenue has fallen for the past three quarters.

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 Q1 Q4 Q3 Q2
Gross Margin 82.9% 83.1% 81.5% 79.9%
Operating Margin 10% 8.1% 2.9% (6.7%)
Net Margin 7.1% 5.5% 6.9% (3%)
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