Analog semiconductor manufacturer Skyworks Solutions Inc. (SWKS) is scheduled to report its fourth-quarter fiscal 2014 results after the market closes on Nov 6. In the last reported quarter, Skyworks’ adjusted earnings (with employee stock adjustments) were in sync with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Key Factors in the Fourth Quarter
Skyworks continues to capitalize on three business segments − mobile Internet, vertical markets and analog components. Perfect quality, environment-friendly products and sustainable business practices are key differentiators for the company.
Skyworks continues to consolidate its market share across the mobile Internet spectrum. This covers everything from net books and data cards to smartphones, and even entry-level handsets. The market for smartphones is reportedly growing four times the growth rate of the traditional cellular handset. The rising RF dollar content and increasing complexity associated with the proliferation of smartphones and an array of other mobile Internet devices are fueling the total available market (TAM) growth, providing a unique opportunity for Skyworks to expand.
Based on product innovation and broad-based customer demand, Skyworks is well poised for sustainable above-market growth in the near term. The company recently revised its earnings and revenue guidance upward for the fourth quarter of fiscal 2014 to better reflect the market conditions and its capability to fully capitalize on the positive underlying market trends.
Skyworks is also well positioned to capitalize on the Internet of Things with a healthy demand for high-performance wireless solutions in new markets. The company believes that its strategy of diversifying its business and expanding into new verticals will drive growth in the forthcoming quarters.
Earnings Whispers
However, despite the positive trends, our proven model does not conclusively show that Skyworks is likely to beat earnings this quarter as it does not possess the key ingredients for a success recipe.
Zero Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%%. This indicates a likely in-line earnings.
Zacks Rank #2 (Buy): Skyworks’ Zacks Rank #2 combined with a zero ESP makes earnings prediction difficult. Note that stocks with a Zacks Ranks of #1 (Strong Buy), #2 (Buy) and #3 (Hold) have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Kemper Corporation (KMPR), earnings ESP of +13.33% and a Zacks Rank #2.
Nationstar Mortgage Holdings Inc. (NSM), earnings ESP of +3.81% and a Zacks Rank #3.
The ADT Corporation (ADT), earnings ESP of +4.08% 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
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