FormFactor Inc. (FORM) is set to report fourth-quarter 2013 results on Feb 5. Last quarter, it posted 266.7% negative surprise. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
FormFactor’s third-quarter loss of 11 cents missed the Zacks Consensus Estimate by 5 cents due to a challenging macro environment and weak demand. The company experienced component delivery delays and product issues that affected deliveries to a DRAM customer, which in turn lowered revenues in the last quarter.
Gross margins contracted in the quarter due to lower-than-forecasted manufacturing utilization in Sep 2013 as a result of a significant drop in demand.
For the fourth quarter, FormFactor expects revenues in the range of $46.0−$50.0 million, non-GAAP gross margin in the range of 10%–15% and non-GAAP operating expenses within $19.0–$20.0 million.
Earnings Whispers?
Our proven model does not conclusively show that FormFactor will beat earnings 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. This is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at (26) cents. Hence, the difference is 0.00%.
Zacks Rank: FormFactor has a Zacks Rank #3 (Hold) which, when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Melco Crown Entertainment Limited (MPEL), with Earnings ESP of +2.50% and a Zacks Rank #1 (Strong Buy).
Westlake Chemical Corp. (WLK), with Earnings ESP of +2.27% and a Zacks Rank #1.
Tesla Motors, Inc. (TSLA), with Earnings ESP of +200.0% and a Zacks Rank #1.
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment