Semiconductor manufacturer Skyworks Solutions Inc. SWKS is scheduled to report its second-quarter fiscal 2015 results after the closing bell on Apr 30. In the last reported quarter, quarterly earnings beat the Zacks Consensus Estimate by 5 cents. Let’s see how things are shaping up for this announcement.
Factors to Consider
Skyworks continues to capitalize on three business segments − mobile Internet, vertical markets and analog components. As demand for mobile Internet applications is exploding with the broad proliferation of smartphones, net books, note books, caplets and other forms of embedded wireless devices, Skyworks continues to gain traction.
Perfect quality, environmentally friendly products and sustainable business practices are key differentiators for the company in this competitive environment. Skyworks also aims to invest in diversified analog markets, while capturing more value through custom system solutions, which will enable it to drive above-market top line growth. The company is aggressively expanding into new vertical markets. It is investing heavily to increase its footprint in traditional analog segments like automotive, like medical and industrial. These are highly attractive markets with longer product life cycles, fewer competitors and higher margins.
Based on order visibility, Skyworks expects continuous strength as the products continue to gain momentum. A joint venture with Panasonic is expected to further enrich its systems capabilities, extend its technology portfolio and improve its financial performance. The transaction is complementary to Skyworks’ strategic investments in high-performance bulk acoustic filters and brings innovative products to the rapidly growing mobile connectivity and Internet markets. It aims to develop customized solutions for all band configurations with filter technology applicability, spanning high, mid and low band frequencies. Skyworks’ product breadth and integration capabilities coupled with Panasonic’s leadership in filtering are expected to be beneficial for both the companies. The transaction is expected to be accretive to Skyworks’ margins and earnings per share.
Earnings Whispers
Our proven model conclusively shows that Skyworks is likely to beat earnings this quarter as it possesses the key ingredients for a success recipe.
Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +0.97%. This indicates a likely earnings beat for the shares.
Zacks Rank: Skyworks’ Zacks Rank #2 (Buy) combined with a positive ESP increases the predictive power of ESP. Note that stocks with a Zacks Ranks of #1 (Strong Buy), #2 (Buy) 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, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Addus HomeCare Corporation ADUS, earnings ESP of +8.33% and a Zacks Rank #1.
AerCap Holdings N.V. AER, earnings ESP of +1.56% and a Zacks Rank #3.
Almost Family Inc. AFAM, earnings ESP of +8.70% and Zacks Rank #1.
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