Silicon Motion Technology Corp. (SIMO) is scheduled to report fourth-quarter and full year 2014 results on Jan 26, after the closing bell.
Last quarter, the company posted a positive surprise of 7.69%. Also, Silicon Motion has a trailing four-month positive surprise of 67.26%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Silicon Motion has been benefitting from strength in the demand of its embedded storage products, especially the eMMC, client SSD and industrial SSD controllers. In the fourth quarter, the company introduced automotive ivi-grade single-package ssd solutions, the first of its kind in the industry.
As per the preliminary data disclosed this month, Silicon Motion expects its fourth-quarter revenues to be seasonally lower in the range of 7 to 8% on a sequential basis. However, the current guidance is higher than the company's prior expectation range of 5% to 10%.
Earnings Whispers?
Our proven model does not conclusively show that Silicon Motion will beat earnings this season. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1(Strong Buy), 2 (Buy) or 3 (Hold)for this to happen. This is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 32 cents. Hence, the difference is 0.00%.
Zacks Rank: Silicon Motion’s Zacks Rank #2 when combined with 0.00% Earnings ESP makes surprise prediction difficult.
Notably, 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 momentum.
Stocks to Consider
Here are some companies that investors may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Century Aluminum Co. (CENX) has an Earnings ESP of +7.81% with a Zacks Rank #1.
Arch Capital Group Ltd. (ACGL)has an Earnings ESP of +1.92% with a Zacks Rank #1.
Horsehead Holding Corp. (ZINC) has an Earnings ESP of +8.33% with a Zacks Rank #3.
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