SunEdison Semiconductor Limited SEMI is slated to report first-quarter 2015 results on May 7. Last quarter, the company posted a negative surprise of 183.83%. Moreover, the company has an average negative surprise of 31.41%. Let's see how things are shaping up for this announcement.
Factors to Consider
SunEdison Semiconductor posted strong fourth quarter results with both the top and bottom lines exceeding the Zacks Consensus Estimate.
Revenues of $205.9 million were down 3.4% sequentially and 2.7% on a year over year basis. The decline was attributable to a lower selling price impacted by unfavorable customer and product mix.
SunEdison’s gross profit for the quarter fell 12.3% to $23.5 million, or 11.4% of net sales, compared to $26.8 million, or 12.6% of net sales, in the prior quarter. However, it grew 250.7% from the year-ago quarter. The sequential decline in gross profit and gross margin was due to lower pricing, which more than offset manufacturing cost reductions. The year-over-year increase was attributable to higher volume, improved efficiencies and lower costs.
In the soon-to-be-reported quarter, margins are expected to benefit from manufacturing and material cost management, improving price and favorable mix.
The company has been witnessing robust demand in its SOI, which is a fast growing product of the company, capabilities recently, and has been ramping up its capacityas well as investments in the product to meet the significantly higher demand. The considerable increase in SOI volume will boost the company’s top line in the coming quarters.
Earnings Whispers?
Our proven model does not conclusively show that SunEdison will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 29 cents. Hence, the difference is 0.00%.
Zacks Rank: SunEdison’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
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 other companies, which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
- Intuit Inc. INTU with Earnings ESP of +2.34% and a Zacks Rank #2 (Buy)
- Cogent Communications Holdings, Inc. CCOI with Earnings ESP of +33.33% and a Zacks Rank #3
- Hortonworks, Inc. HDP with Earnings ESP of +1.18% and a Zacks Rank #3
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