Applied Materials, Inc. (AMAT Quick QuoteAMAT - Free Report) is set to report fiscal third-quarter 2016 results on Aug 18.  Last quarter, it posted a positive surprise of 6.25%. Let’s see how things are shaping up for this announcement.

Factors at Play

The second quarter was a decent one for Applied Materials, with both top and bottom lines surpassing the respective Zacks Consensus Estimate. In the second quarter, the ramp up of 3D NAND has led to significant market share gains. Combined CVD and etch revenues were at a nine-year high. 

Applied Materials has well-differentiated products and a significant market share and continues to deliver key enabling technology to logic and foundry customers. The company is doing very well on the service front and has witnessed 10 consecutive quarters of year-on-year growth.

The company is strongly positioned in China. In the second quarter, Applied Materials received a record number of semiconductor orders from China. Growing investments from Chinese domestic manufacturers have been the main catalyst.

Notably, new display technologies like OLED are opening up fresh opportunities for Applied. It continues to expect strong products and services demand in the near future driven by the adoption of new technologies by semiconductor and display customers.

Management believes that it is in a great position to grow sustainably and profitably based on its strong pipeline of enabling technologies, supported by expanding opportunities on the semiconductor, service and display fronts.

Applied Materials expects third quarter of fiscal 2016 revenues to increase 14–18 percentage points sequentially. Non-GAAP EPS is expected to come in a range of 46 cents to 50 cents.

Earnings Whispers?

Our proven model does not conclusively show that Applied Materials will 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. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 47 cents. Therefore, the ESP for the stock is 0.00%.

Zacks Rank: Applied Materials holds a Zacks Rank #3 which when combined with a 0.00% ESP makes surprise prediction difficult.

Stocks to Consider

Here are some stocks, which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Carbonite, Inc. , with an Earnings ESP of +50.00% and a Zacks Rank #1.

Stoneridge Inc. (SRI Quick QuoteSRI - Free Report) with an Earnings ESP of +5.71% and Zacks Rank #1.

Cognex Corporation (CGNX Quick QuoteCGNX - Free Report) with an Earnings ESP of +2.17% and Zacks Rank #1.

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