Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and VeriFone (NYSE:PAY) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

VeriFone is in the middle of one of the most transformative events in history relating to how people handle money. With mobile payment systems on the rise, the company has huge potential, but is it taking all the steps it needs to in order to cash in on the opportunity? Let's take an early look at what's been happening with VeriFone over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on VeriFone

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$431.5 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will VeriFone pay off for investors this quarter?
Analysts have dramatically reduced their earnings calls for VeriFone in the past month, lopping nearly a quarter per share off their consensus earnings for the January quarter and more than $1 from their consensus for the full 2013 fiscal year. The stock has also taken a huge hit, falling 36% since early December.

Just about every bit of that big decline came from early guidance that VeriFone provided for the previous and current quarters. The company set a range of $0.47 to $0.50 per share for its fiscal first quarter, down sharply from $0.73 previously. Even worse, VeriFone expects similarly bad earnings results for the current fiscal second quarter, with revenue 12% to 15% below what analysts had expected to see. VeriFone said that European economic issues were a major contributor to the poor outlook, but investors worry there could be bigger problems plaguing the company.

Yet even with VeriFone's woes, the industry is too promising for the company to give up. Rivals Square and eBay's (NASDAQ:EBAY) PayPal have attacked VeriFone by aiming at users with small transaction volumes, for whom flat-fee pricing represents a big savings compared to VeriFone's cost structure. But for the high-volume businesses that deliver the most profit potential, VeriFone's model can be less expensive for business customers. Yet with Groupon (NASDAQ:GRPN) offering discounted payments for existing customers and Intuit (NASDAQ:INTU) aiming at mid-sized businesses with extra services and advanced payment options, VeriFone faces huge amounts of competition.

In its quarterly report, pay special attention to VeriFone's commentary about exactly why it hasn't been able to cash in on the mobile payment trend. Right now is a crucial time for VeriFone to give specific ideas on how it plans to recover from its bad news and shore up investor confidence for the future.

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