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Will Cypress (CY) Beat Earnings Estimates This Quarter?


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Cypress Semiconductor Corporation (CY - Analyst Report) is set to report third-quarter 2013 results on Oct 17. Last quarter, the company’s earnings exceeded our expectations. Let us see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company’s revenues beat management’s guided range of $178.0 million–$186.0 million and were also up sequentially. This can be attributed to broad strength across all business units, particularly in TrueTouch BU. Also, gross margins expanded sequentially due to better factory utilization rates and favorable product and customer mix.

Cypress recently reduced its third-quarter guidance. The company reduced the revenue guidance from $201 million–$207 million to $184 million–$187 million taking into account the reduced demand from its major handset customers. The earnings per share outlook has also been lowered to 10 cents–12 cents from the previous guidance of 17 cents –18 cents.

Earnings Whispers?

Our proven model does not conclusively show that Cypress is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  The earnings ESP for the stock is 0.00%.

Zacks Rank #3 (Hold): Cypress’ Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction 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 negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Jarden Corp. , with Earnings ESP of +2.00% and a Zacks Rank #1 (Strong Buy).

Micron Technology Inc. (MU - Analyst Report), with Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).

Advanced Micro Devices, Inc (AMD - Analyst Report), with Earnings ESP of +50.0% and a Zacks Rank #1 (Strong Buy).