SunEdison Semiconductor Limited SEMI is slated to report third-quarter 2015 results on Nov 9. Last quarter, the company posted a negative surprise of 34.48%. Moreover, the company has an average negative surprise of 27.70% over the past four quarters. Let's see how things are shaping up for this announcement.
Factors to Consider
The company is focused on boosting the profitability of the business by offering high-quality value-added and leading-edge products that will enable it to raise prices and improve its mix.
Also, its global footprint with facilities located next to its biggest customers, its leading edge technologies in FE and SOI and strong focus on operational execution and cost position the company well. Therefore, in the soon-to-be-reported quarter, margins are expected to benefit from manufacturing and material cost management, improving price and favorable mix.
SunEdison Semiconductor posted a wider-than-expected loss in the second quarter while revenues exceeded the Zacks Consensus Estimate.
Revenues of $207.4 million were up 4% sequentially but down 3.5% on a year-over-year basis. The sequential increase was driven by higher volume in both polished and SOI wafers. The year-over-year decline was due to lower prices, partially offset by higher volume.
Gross profit and gross margin percentage increased sequentially and year over year, owing to higher volume and lower manufacturing cost. However, lower average prices partially offset the year-over-year increase.
Earnings Whispers?
Our proven model does not conclusively show that SunEdison Semiconductor 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 $1.40. 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 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 these have the right combination of elements to post an earnings beat this quarter:
- Agilent Technologies Inc. A, with Earnings ESP of +2.13% and a Zacks Rank #2 (Buy)
- Ameren Corporation AEE, with Earnings ESP of +1.53% and a Zacks Rank #2
- Zayo Group Holdings, Inc. ZAYO, with Earnings ESP of +100.00% and a Zacks Rank #3
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