Tessera Technologies Inc. TSRA is slated to report second-quarter 2015 results on Aug 3. In the last-reported quarter, Tessera recorded a positive earnings surprise of 12.50%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Tessera posted strong first-quarter results with both the top and bottom lines exceeding the Zacks Consensus Estimate. Revenues were up 33.3% sequentially but down 9.6% year over year. The year-over-year decrease was basically due to a fall in episodic revenues, which was partially offset by growth in recurring revenues.
The increase in recurring revenues reflects the company’s successful settlement of the long-standing disputes with Amkor and Powertech and its focus on license alliances with customers, license revenues from Micron, and continued growth from FotoNation.
The company has lowered its operating expenses, increased technical collaboration, redirected investment to areas with growth potential and secured several patent licensing agreements and design wins. All these factors are expected to drive the company’s results in the to-be reported quarter.
For the second quarter of 2015, Tessera expects revenues in the range of $62 million–$64 million. The Zacks Consensus Estimate is pegged at $58.0 million for revenues. GAAP earnings per share are expected to be between 37 cents to 40 cents, while non-GAAP earnings per share are expected to be in the range of 47 cents – 50 cents. The Zacks Consensus Estimate is pegged at $63 million.
Earnings Whispers?
Our proven model does not conclusively show that Tessera will beat estimates this quarter. This 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 44 cents. Hence, the difference is 0.00%.
Zacks Rank: Tessera’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #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, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
ZAGG Inc ZAGG, with Earnings ESP of +12.50% and a Zacks Rank #2 (Buy)
SunEdison, Inc. SUNE, with Earnings ESP of +8.89% and a Zacks Rank #3
Wix.com Ltd. WIX, with Earnings ESP of +9.09% and a Zacks Rank #3
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