Back to top

Analyst Blog

We expect technology licensing company Rambus Inc. (RMBS - Snapshot Report) to beat expectations when it reports second quarter 2013 results on Jul 18.

Why a Likely Positive Surprise?

Our proven model shows that Rambus is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +9.09%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of Rambus’ Zacks Rank # 1 (Strong Buy) and +9.09% ESP makes us very confident in looking for a positive earnings beat on Jul 18.

What is Driving the Better Than Expected Earnings?

We believe that Rambus has had a great quarter. Rambus has signed a two-way licensing agreement with European chip-making company STMicroelectronics. Both the companies will use each other’s patented technologies for excelling in their core areas. Apart from this, the deal puts an end to the decade-long legal battle between the two companies and also keeps the doors open for further collaborations.

Apart from STMicro, Rambus settled legal disputes with South Korean memory chip-making company SK Hynix and signed a patent licensing agreement.

Also, Rambus is adding features to its LED (light emitting diodes) portfolio and is on its way to capitalize on the growing popularity of energy-efficient lighting.

Rambus has surpassed estimates in the past four trailing quarters, which resulted in an average positive surprise of 176.85%.

Other Stocks to Consider

Apart from Rambus, we also expect earnings beat from the following stocks.

SanDisk Corp. (SNDK - Analyst Report), Earnings ESP of +4.55% and Zacks Rank #1 (Strong Buy).

Huron Consulting Group Inc. (HURN - Snapshot Report), Earnings ESP of +1.64% and Zacks Rank #2 (Buy).

Gartner Inc. (IT - Snapshot Report), Earnings ESP of +1.96% and Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%