What factors could drive IOT's EPS surprise in 2026?

**Samsara's (NYSE:IOT) EPS surprise in 2026 is likely to be driven by a combination of factors**, including robust revenue growth, operational efficiency, and strategic customer engagements. Here's a detailed analysis: 1. **Revenue Growth**: Samsara has issued a revenue guidance for FY 2026 of $1.5 billion, which aligns with the consensus estimate. The company's strong revenue growth, particularly in the Internet of Things (IoT) solutions sector, is expected to contribute significantly to the EPS surprise. The forecast for free cash flow (FCF) margin stands at around 9%, indicating a strong financial performance. 2. **Gross Profit Margins**: The company boasts impressive gross profit margins of 76.12%, which is a testament to its operational efficiency and the value it creates for its customers. This margin is a key indicator of Samsara's ability to generate earnings from its revenue, and it suggests that the company has a solid business model that can translate into higher EPS. 3. **Strategic Customer Engagements**: Samsara's ability to secure larger customer deals has been highlighted as an area of focus. The company's management team is leveraging its expanded product offerings to capture these opportunities, which is likely to result in higher revenue and potentially higher EPS. The growth of annual recurring revenue (ARR) to $1.46 billion, which jumped 33% year-over-year, is a positive sign. 4. **Market Position and Analyst Confidence**: Despite potential concerns, the management has indicated minimal risk from any impending tariffs that could affect the business. This strategic positioning is likely to protect the company's margins and EPS. Analysts have set a high price target of $51.67, with several analysts giving a buy rating to the stock. This positive analyst sentiment reflects confidence in Samsara's business model and market position, which could lead to higher EPS as the company continues to perform well. 5. **Financial Performance**: Samsara's recent financial performance has been robust, with a 36% adjusted growth and a revenue beat of approximately 3.5% in the fourth quarter. The company's guidance for fiscal year 2026 predicts a 23-24% constant currency growth, aligning with the Street’s expectation of 24%. This suggests that the company is on track to meet or exceed earnings expectations. In conclusion, Samsara's EPS surprise in 2026 is likely to be driven by its strong revenue growth, high gross profit margins, strategic customer engagements, positive market position, and robust financial performance. These factors combined are likely to contribute to an EPS that may exceed market expectations.