MKS Instruments, Inc. (MKSI) is scheduled to report fourth-quarter 2014 results after the opening bell on Jan 28, 2015. Over the last four trailing quarters, the company reported a positive average earnings surprise of 26.08%. In the preceding quarter, the company reported earnings of 43 cents, which surpassed the Zacks Consensus Estimate by 16.22%. Let’s see how things are shaping up prior to this announcement.
Factors to Influence Q4 Results
The company is experiencing an improvement in both its top and bottom line driven by growing demand in the global semiconductor market. Further, remarkable returns accrued from its acquired business division, Granville-Phillips adds to its upside. Also, backed by cost-reduction initiatives, the company has been able to lower its operating expenses over time..
Presently, MKS Instruments is strengthening its expertise in the general industrial applications market through the inventive G-Series multi-gas and multi-range mass flow controllers. Furthermore, with the recent launch of its new 902B Absolute Piezo vacuum transducer, the company has enhanced its position in the global technology market as well.
Massive innovation expenses, in order to ensure greater market share gains, are indispensable for the company. However, in the rapidly evolving technology market, expensive inventions often become outdated within a very limited span of time. Such expenses, therefore, raise the operating expenses, negatively impacting the company’s margins. Besides, MKS Instruments faces concentrated demand in business. These factors might unfavorably affect the top and bottom line results.
Earnings Whispers
Considering the above factors, 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 #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. That is not the case here as we will see below.
Zacks ESP: The Earnings ESP of MKS Instruments is 0.00%, as the Most Accurate estimate stands in line with the Zacks Consensus Estimate of 47 cents.
Zacks Rank: MKS Instruments’ Zacks Rank #3 (Hold), when combined with a zero 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 you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Charter Communications, Inc. (CHTR), with an Earnings ESP of +121.74% and a Zacks Rank #2.
Apple Inc. (AAPL), with an Earnings ESP of +2.33% and a Zacks Rank #2.
Cree, Inc. (CREE), with an Earnings ESP of 8.33% and a Zacks Rank #1.
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