SunEdison Semiconductor Limited SEMI is slated to report second-quarter 2015 results on Aug 5. Last quarter, the company posted a positive surprise of 31.03%. Moreover, the company has an average positive surprise of 11.05%. Let's see how things are shaping up for this announcement.
Factors to Consider
SunEdison Semiconductor posted mixed first quarter results with the bottom line exceeding the Zacks Consensus Estimate but the top line missing the same.
Revenues of $199.4 million were down 3.2% sequentially and 3.3% on a year-over-year basis. Both sequential and year-over-year declines were due to lower prices. However, improved sales mix due to growth in EPI and SOI revenues partially offset sequential declines.
Gross profit fell 26.8% to $17.2 million, or 8.6% of net sales, compared with $23.5 million, or 11.4% of net sales, in the prior quarter. However it grew 107.2%, representing 460 basis points of margin expansion from the year-ago quarter. The sequential decline in gross profit and gross margin due to lower pricing and the year-over-year increase was attributable to higher volume, and lower costs, which more than offset lower pricing.
In the soon-to-be-reported quarter, margins are expected to benefit from manufacturing and material cost management, improving price and favorable mix.
The company has been witnessing robust demand in its SOI, which is a fast growing product of the company, and has been ramping up its capacity as well as investments in the product to meet the significantly higher demand. The considerable increase in SOI volume will boost the company’s top line in the coming quarters.
Earnings Whispers
Our proven model does not conclusively show that SunEdison 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 a loss of 29 cents. Hence, the difference is 0.00%.
Zacks Rank: SunEdison’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 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 these have the right combination of elements to post an earnings beat this quarter:
Jack Henry & Associates Inc. JKHY, with Earnings ESP of +4.55% and a Zacks Rank #3.
SunEdison, Inc. SUNE, with Earnings ESP of +13.33% and a Zacks Rank #3.
Amtech Systems Inc. ASYS, with Earnings ESP of +8.00% and a Zacks Rank #3.
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 >>
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