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Microsemi Inc (MSCC - Analyst Report) is set to report fiscal fourth quarter 2013 results on Nov 7. Last quarter it posted a 10.5% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Microsemi’s earnings per share in the third quarter of fiscal 2013 came in at 42 cents, beating the Zacks Consensus Estimate by 4 cents. Microsemi reported revenues of $242.6 million in the third quarter, which was up sequentially but down on a year over year basis.

Microsemi is witnessing strong booking growth in C4ISR, military avionics and cyber security applications. PoE (Power Over Ethernet) expansion into new markets is another growth factor for Microsemi.

The sequential rise in gross margin in the last quarter was due to higher volumes and favorable mix. The year-over-year margin expansion was due to a growing percentage of new high-margin products in the mix and cost reduction.

For the fourth quarter of fiscal 2013, Microsemi expects revenues to increase 2–4% and the tax rate is likely to be 6.0%. Non-GAAP earnings per share are expected to be around 51–55 cents.

Earnings Whispers?

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

Zacks ESP: That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 43 cents. Hence, the difference is 0.00%.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement..

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:  

Melco Crown Ent (MPEL - Snapshot Report) with an Earnings ESP of +6.45% and a Zacks Rank # 1 (Strong Buy).

Akorn Inc (AKRX - Snapshot Report) with an Earnings ESP of +7.69% and a Zacks Rank # 1 (Strong Buy).

Blucora Inc (BCOR - Snapshot Report) with an Earnings ESP of +57.14% and a Zacks Rank # 1 (Strong Buy).
 

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