Amkor Technology, Inc. (AMKR) is set to report the third-quarter 2014 results on Oct 27. Last quarter, the company posted 7.1% negative surprise. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Amkor Technology’s second-quarter earnings of 13 cents missed the Zacks Consensus Estimate by a penny. However, revenues were up sequentially as well as year over year, driven by strong sales of communications products.
Margins of 19.6% were up 110 basis points sequentially and year over year due to favorable product mix.
For the third quarter, management expects revenues in the range of $815–$865 million, an increase of 6% to 13% sequentially and from the year-ago quarter. Net income is expected in the range of $47–$70 million or earnings in the range of 20–29 cents per share.
Earnings Whispers?
Our proven model does not conclusively show that Amkor Technology 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 26 cents. Hence, the difference is 0.00%.
Zacks Rank: Amkor’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
You could consider other stocks with a positive Earnings ESP and a favorable Zacks Rank such as:
Westlake Chemical Corp (WLK), with an Earnings ESP of +2.58% and a Zacks Rank #1 (Strong Buy).
Kirby Corporation (KEX), with an Earnings ESP of +2.92% and a Zacks Rank #1.
Gentherm Incorporated (THRM), with an Earnings ESP of +4.65% and a Zacks Rank #1.
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