Technology company MKS Instruments, Inc. (MKSI) is scheduled to release second-quarter 2014 results on Jul 23 after the market closes. The company had delivered a positive earnings surprise of 21.43% in the preceding quarter. Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Significant contribution from acquisitions is expected to boost revenues in the second quarter. MKS Instruments acquired the Granville-Phillips division in Mar 2014. Given the strong cash position, the company targets further strategic acquisitions which will lead to long-term gains.
MKS Instruments has a strong customer base and their association has proved advantageous for the company over time. With continued improvement in the semiconductor market, contribution from these customers is also expected to soar.
Moreover, MKS Instruments has been making efforts to increase shareholders’ value. In first-quarter 2014, the company paid a cash dividend of roughly $8.6 million or 16 cents per share. Additionally, it repurchased roughly 32,000 shares at an average price of $29.81 per share.
Earnings Whispers
Our proven model does not conclusively show that MKS Instruments is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, #2 or #3 for this to happen. That is not the case here as we will see below.
Earnings ESP: Expected Surprise Prediction or ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This indicates in-line earnings for the stock.
Zacks Rank: MKS Instruments’ Zacks Rank #3 (Hold), when combined with a 0.00% ESP makes surprise predictions difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Other Stocks to Consider
Here are some companies in the industry that investors may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Skyworks Solutions Inc. (SWKS), Earnings ESP of +9.52% and a Zacks Rank #1 (Strong Buy).
Cepheid (CPHD), Earnings ESP of +22.22% and a Zacks Rank #3.
Garmin Ltd. (GRMN), Earnings ESP of +1.33% and a Zacks Rank #3.
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