Lam Research Corporation (LRCX) is set to report second-quarter fiscal 2015 results on Jan 28. Last quarter, the company posted a positive earnings surprise of 3.23%. Let us see how things are shaping up for this announcement.
Factors to Consider
Lam Research delivered modest fiscal first quarter 2015 results with earnings beating the Zacks Consensus Estimate while revenues coming in line with the same. Both the foundry and NAND segments did well in the quarter.
Further, the company provided strong guidance for the second quarter of fiscal 2015. The company expects to reach another high point by the end of this year with the shipment of the 250th Flex FX product for memory high aspect ratio application.
On a GAAP basis, management expects revenues of approximately 1.23 billion (+/- 50 million). Earnings per share are projected to be 89 cents (+/- 7 cents) on a share count of approximately 175.0 million.
On a non–GAAP basis, it expects revenues of approximately 1.23 billion (+/- 50 million). Earnings per share are projected to be $1.12 (+/- 7 cents) on a share count of approximately 173.0 million.
The company plans to add to 3D NAND capacity. However, it expects planar spending to be higher than 3D.
On Dec 22, 2014, the company was included in the NASDAQ-100 Index.
Lam Research’s cutting edge solutions and good execution will help the company create value for its shareholders. The company believes that key technology inflections in areas like multi-patterning, FinFET, 3D and NAND will boost growth and profitability going forward.
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 $1.12. Hence, the difference is 0.00%.
Zacks Rank: Lam currently carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.
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
Here are some companies which you may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ellie Mae, Inc. (ELLI) with Earnings ESP of +40.00% and a Zacks Rank #1 (Strong Buy)
Expedia Inc. (EXPE) with Earnings ESP of +3.49% and a Zacks Rank #1
Apple Inc. (AAPL) with Earnings ESP of +2.33% and a Zacks Rank #1
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