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Will Microchip (MCHP) Beat Earnings Estimates Again in Q1?
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Leading semiconductor manufacturer Microchip Technology Inc. (MCHP - Free Report) is scheduled to report first-quarter fiscal 2017 results after the closing bell on Aug 8. In the last reported quarter, Microchip’s adjusted earnings beat the Zacks Consensus Estimate by five cents. The company has beaten earnings estimates in each of the last four quarters with an average positive earnings surprise of 6.07%. Let’s see how things are shaping up for this announcement.
Key Factors in the First Quarter
Microchip is one of the fastest growing providers of 16-bit and 32-bit microcontrollers in the world. The microcontroller business of the company has historically outperformed the industry and is expected to record a solid performance in the upcoming quarter as well.
The company remains bullish on the surging demand for 3D control displays in a gamut of industries ranging from home automation to IoT (Internet of Things). Microchip is also increasingly expanding its touch business beyond handsets and tablets in areas such as automotive industrial applications.
During the quarter, Microchip revealed that General Motors Company (GM) was using its Media Oriented Systems Transport (MOST) Intelligent Network Interface Controllers to manage the infotainment system networking functions in their global compact car platform. In addition, the synchronous, flexible, and cost-effective MOST networking technology was also implemented in all of General Motors’ mid-size, full-size, performance, cross-over and SUV, truck, and luxury platforms across all vehicle brands.
The MOST network supports multiple data types simultaneously, enabling car manufacturers to offer system and feature set flexibility for current and future automotive infotainment applications. This helps reduce the wiring harness weight for easier compliance with environmental regulations. Such wider acceptance of its products is likely to translate into higher revenues leading to bottom-line growth in the impending quarter.
The Analog business of Microchip has also become one of the largest analog franchises in the market. In order to further capitalize on this burgeoning business potential, Microchip is developing and introducing a wide range of innovative and proprietary new products. In addition, with a diligent focus on right-sizing the various components of inventory holdings, Microchip has been able to reduce its inventory to further boost its operating results during the quarter.
Earnings Whispers
Our proven model does not conclusively show that Microchip is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for a successful earnings beat. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%.
Zacks Rank: Microchip’s Zacks Rank #3 when combined with 0.00% ESP makes an earnings beat uncertain. We caution against stocks with a 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 some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
LATAM Airlines Group S.A. has an Earnings ESP of +166.67% and a Zacks Rank #3.
Mylan N.V. has an Earnings ESP of +1.75% and a Zacks Rank #2.
CDK Global Inc. has an earnings ESP of +2.08% and a Zacks Rank #1.
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Will Microchip (MCHP) Beat Earnings Estimates Again in Q1?
Leading semiconductor manufacturer Microchip Technology Inc. (MCHP - Free Report) is scheduled to report first-quarter fiscal 2017 results after the closing bell on Aug 8. In the last reported quarter, Microchip’s adjusted earnings beat the Zacks Consensus Estimate by five cents. The company has beaten earnings estimates in each of the last four quarters with an average positive earnings surprise of 6.07%. Let’s see how things are shaping up for this announcement.
Key Factors in the First Quarter
Microchip is one of the fastest growing providers of 16-bit and 32-bit microcontrollers in the world. The microcontroller business of the company has historically outperformed the industry and is expected to record a solid performance in the upcoming quarter as well.
The company remains bullish on the surging demand for 3D control displays in a gamut of industries ranging from home automation to IoT (Internet of Things). Microchip is also increasingly expanding its touch business beyond handsets and tablets in areas such as automotive industrial applications.
During the quarter, Microchip revealed that General Motors Company (GM) was using its Media Oriented Systems Transport (MOST) Intelligent Network Interface Controllers to manage the infotainment system networking functions in their global compact car platform. In addition, the synchronous, flexible, and cost-effective MOST networking technology was also implemented in all of General Motors’ mid-size, full-size, performance, cross-over and SUV, truck, and luxury platforms across all vehicle brands.
MICROCHIP TECH Price and EPS Surprise
MICROCHIP TECH Price and EPS Surprise | MICROCHIP TECH Quote
The MOST network supports multiple data types simultaneously, enabling car manufacturers to offer system and feature set flexibility for current and future automotive infotainment applications. This helps reduce the wiring harness weight for easier compliance with environmental regulations. Such wider acceptance of its products is likely to translate into higher revenues leading to bottom-line growth in the impending quarter.
The Analog business of Microchip has also become one of the largest analog franchises in the market. In order to further capitalize on this burgeoning business potential, Microchip is developing and introducing a wide range of innovative and proprietary new products. In addition, with a diligent focus on right-sizing the various components of inventory holdings, Microchip has been able to reduce its inventory to further boost its operating results during the quarter.
Earnings Whispers
Our proven model does not conclusively show that Microchip is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for a successful earnings beat. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%.
Zacks Rank: Microchip’s Zacks Rank #3 when combined with 0.00% ESP makes an earnings beat uncertain. We caution against stocks with a 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 some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
LATAM Airlines Group S.A. has an Earnings ESP of +166.67% and a Zacks Rank #3.
Mylan N.V. has an Earnings ESP of +1.75% and a Zacks Rank #2.
CDK Global Inc. has an earnings ESP of +2.08% and a Zacks Rank #1.
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 >>