Lam Research Corporation (LRCX) is set to report first-quarter fiscal 2015 results on Oct 22. Last quarter, the company posted a positive earnings surprise of 2.46%. Let us see how things are shaping up for this announcement.
Factors to Consider this Past Quarter
Lam Research delivered encouraging fiscal fourth quarter 2014 results with both the top and bottom lines beating the Zacks Consensus Estimate. It reported a fourth quarter fiscal 2014 non-GAAP earnings of $1.25 per share, which beat the Zacks Consensus Estimate by 3 cents. Earnings decreased 0.6% sequentially but increased 55.9% on a year-over-year basis. The increase was primarily driven by improved revenues for the quarter.
Deposition and etching machines convert silicon wafers into integrated circuits. Lam Research controls 51% of that space while Applied Materials (AMAT) and Tokyo Electron, which plan to merge later this year under the new company name Eteris, have 34%. The Applied Materials and Tokyo Electron merger may lead to opportunities for Lam to gain market share as those two companies endeavor to combine their operations.
Lam Research has also been gaining share in the etch business with Intel (INTC) at the expense of Hitachi-High Tech and has won new business at Samsung, at the expense of Applied Materials.
Earnings Whispers?
Our proven model does not conclusively show that Lam will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 94 cents. Hence, the difference is 0.00%.
Zacks Rank: Lam currently carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stock to Consider
Our model shows that Apple inc. (AAPL) has the right combination of elements to post an earnings beat. Apple has an Earnings ESP of +4.62% and a Zacks Rank #2 (Buy).
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