Semiconductor solutions provider QuickLogic Corporation (QUIK) is set to report third-quarter 2014 earnings results after the closing bell on Oct 29. In the last quarter, the company failed to spring any surprise, with earnings aligned with the Zacks Consensus Estimate. Let's see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
The quarter saw QuickLogic winning new display bridge designs for tablets for industrial and enterprise applications. Also, its PolarPro II-based CSSP (Customer Specific Standard Products) was selected by Japan Radio Company, Ltd. to enhance the connectivity capabilities of its next-generation Personal Handy-Phone System. These deals are expected to boost QuickLogic’s earnings.
During the quarter, QuickLogic launched the second CSSP solution in its Sensor Hub roadmap titled the ArcticLink 3 S2 Sensor Hub – an ultra-low power, context-aware sensor hub optimized for smartphones and wearable devices. The market for sensor hubs in smartphones and wearables holds great potential and with its new distinctive sensor hub solution, QuickLogic’s revenues can benefit from the lucrative opportunities that this nascent market offers.
However, a global decline in demand for tablets has been evident on sales of display bridge products, and might hurt the company’s revenue to some extent.
Earnings Whispers
Our proven model does not conclusively show that QuickLogic is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, #2 or #3 for this to happen. This is not the case here as you will see below.
Zero ESP: QuickLogic has an ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 9 cents per share, making the difference 0.00%.
Zacks Rank: The combination of QuickLogic’s Zacks Rank #3 (Hold) and an ESP of 0.00% makes surprise prediction difficult. Stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings.
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.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
AmSurg Corp. (AMSG) has an Earnings ESP of +18.52% and a Zacks Rank #1 (Strong Buy).
Redwood Trust, Inc. (RWT) has an Earnings ESP of +25.81% and a Zacks Rank #1.
Gentherm Inc. (THRM) has an Earnings ESP of +4.65% and a Zacks Rank #1.
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