Stem to Report Q1 Earnings: What's in the Cards for the Stock?

Stem STEM is set to report its first-quarter 2025 earnings results on April 29.

The Zacks Consensus Estimate for the first quarter of 2025 revenues is pegged at $25.80 million, suggesting an increase of 1.30% from the year-ago quarter’s reported figure.

The consensus mark for the first-quarter 2025 bottom line is pegged at a loss of 20 cents per share, which has widened by 6 cents over the past 30 days. This also marks a sharp improvement from the year-ago quarter's loss of 46 cents.

Stem’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters and beat the other two, the average negative surprise being 26.41%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Stem, Inc. Price and EPS Surprise

 

Stem, Inc. price-eps-surprise | Stem, Inc. Quote

Let us see how things have shaped up for the upcoming announcement.

Key Factors to Note Ahead of STEM’s Q1 Results

Stem’s first-quarter 2025 performance is expected to have benefited from sustained momentum in its high-margin software platform, PowerTrack, which has significantly delivered gross margins of 70-80% in the previous quarters. The company’s ongoing strategic shift toward software and services, aimed at reducing its reliance on lower-margin hardware sales, is likely to have supported improved profitability in the first quarter.

Stem’s international expansion, highlighted by a notable deal with Neovolt in Hungary to manage a 484 MW solar portfolio, is expected to have further contributed to revenue growth in the to-be-reported quarter as global demand for its energy optimization platform continued to gain momentum.

The company anticipates an improvement in its operating cash flow, supported by working capital releases associated with OEM hardware. This improvement is expected to have benefited from more efficient inventory management and the ongoing wind-down of lower-margin hardware deployments, which had already experienced a decline in the quarter under review.

STEM plans to cut operational expenses by more than 20% in 2025 on a proportional basis, as part of its broader strategy to drive profitability and improve operational efficiency. The company’s cost-optimization efforts are expected to have been supported by targeted initiatives, including the elimination of inefficiencies, a streamlined corporate structure and greater decision-making authority delegated to its management teams.

However, a significant decline in hardware sales in the fourth quarter of 2024 weighed on the company’s overall performance. This downward trend is expected to have persisted into the first quarter of 2025, pressuring total revenues.

What Our Model Says

Per the Zacks model, 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. But that is not the exact case here.

Stem currently has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy). You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Affirm AFRM currently has an Earnings ESP of +57.14% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AFRM is set to report its fiscal third-quarter fiscal 2025 results on May 8. The Zacks Consensus Estimate for the third-quarter bottom line is pegged at a loss of 8 cents per share. The consensus estimate indicates year-over-year growth of 81.40%.

StoneCo STNE currently has an Earnings ESP of +13.79% and a Zacks Rank #1.

STNE is scheduled to release its first-quarter 2025 results on May 08. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at 29 cents per share, suggesting no change from the year-ago reported figure.

Qorvo QRVO has an Earnings ESP of +3.42% and a Zacks Rank #2 at present.

QRVO is set to report its fourth-quarter fiscal 2025 results on April 29. The Zacks Consensus Estimate for fourth-quarter fiscal 2025 earnings is pegged at $1.01 per share. The consensus estimate indicates a year-over-year decline of 27.34%.

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This article originally published on Zacks Investment Research (zacks.com).

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