We expect Cirrus Logic Inc. (CRUS) to beat expectations when it reports fiscal second-quarter 2015 results on Oct 29.
Why a Likely Positive Surprise?
Our proven model shows that Cirrus Logic is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (53 cents per share) and the Zacks Consensus Estimate (47 cents per share), stands at +12.77%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank: Cirrus Logic has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Cirrus Logic’s Zacks Rank #3 and +12.77% ESP makes us very confident in looking for a positive earnings beat.
What's Driving the Better-Than-Expected Earnings?
Cirrus Logic generates a significant portion (approximately 80%) of its revenues from Apple (AAPL). So there is a good chance that the company will benefit from higher adoption of Apple’s products, especially from strong iPhone sales.
Moreover, continued investment in the audio segment is expected to positively impact the company over the long run. Additionally, synergies from acquisitions, like the Wolfson Microelectronics, and expansion in the LED market continue to drive growth.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Facebook, Inc. (FB), with an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
The Walt Disney Company (DIS), with an Earnings ESP of +3.41% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment