Back to top

Image: Bigstock

Xilinx (XLNX) Q1 Earnings: Can the Stock Pull a Surprise?

Read MoreHide Full Article

Xilinx Inc. is set to report first-quarter fiscal 2017 results on Jul 27. Last quarter, the company posted a positive earnings surprise of 3.85%. Notably, the stock has surpassed the Zacks Consensus Estimate thrice in the four trailing quarters with an average positive surprise of 2.99%.

Let's see how things are shaping up for this announcement.

Factors to Consider

The California-based chipmaker reported better-than-expected results during the fourth quarter of fiscal 2016. The top line improved year over year, while stabilizing trends were witnessed across all of the company’s end-market segments. In spite of all these factors, the company has provided a soft revenue guidance for the first quarter of fiscal 2017.

A slowdown in the Chinese economy, along with economic weakness in Europe and the Asia-Pacific, could impact Xilinx’s quarterly results. The company has also been facing a new set of challenges related to the acquisition of Altera by Intel. The acquisition has provided Intel a strategic advantage over Xilinx.

Additionally, higher spending on research and development, and selling, general and administrative activities could dent the company’s near-term results. Also, stiff competition from Lattice Semiconductor Corporation (LSCC - Free Report) is a material headwind.

Nonetheless, we are optimistic about the company’s recent decision to tap the fast-growing cloud computing, embedded, industrial IoT and 5G markets, which is likely to drive its revenues in the long run.

XILINX INC Price and EPS Surprise

XILINX INC Price and EPS Surprise | XILINX INC Quote

Earnings Whispers

Our proven model does not conclusively show that Xilinx is likely to beat earnings this quarter. This 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 this to happen. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Xilinx is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 55 cents.

Zacks Rank: Xilinx’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

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

Open Text Corp. (OTEX - Free Report) , with an Earnings ESP of +1.10% and a Zacks Rank #1.

Boyd Gaming Corporation (BYD - Free Report) , with an Earnings ESP of +3.33% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Open Text Corporation (OTEX) - free report >>

Boyd Gaming Corporation (BYD) - free report >>

Lattice Semiconductor Corporation (LSCC) - free report >>

Published in