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Will Lam Research (LRCX) Beat on Earnings Again in Q1?

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Lam Research Corporation (LRCX - Free Report) , a leading provider of semiconductor manufacturing systems, is set to report first-quarter fiscal 2017 results on Oct 19. Last quarter, it posted a 9.76% positive surprise. The company has delivered positive earnings surprises in the last four quarters with an average beat of 8.66%.

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

Why a Likely Positive Surprise?

Our proven model shows that Lam Research is likely to beat earnings because it has the right combination of key factors.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate of $1.78 and the Zacks Consensus Estimate of $1.77, is +0.57%. This is a meaningful indicator of a likely positive earnings surprise for this company.

Zacks Rank: Lam Research carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Lam Research’s Zacks Rank #3 and +0.57% ESP make us confident of an earnings beat in the soon-to-be reported quarter.

What is Driving the Better-than-Expected Earnings?

Lam Research continues to see robust strength in the areas of device architecture, process flow and advanced packaging technology inflections. The company has been improving on WFE market share significantly since 2013 and expects to continue making gains.

In Sep 2016, the company also undertook some management shuffling, appointing Rick Tsai to its board. Tsai had earlier held key positions at companies like Chunghwa Telecom Co. Ltd., NXP Semiconductors N.V. and Taiwan Semiconductor Manufacturing Company, Limited.

The company expected to close the merger with KLA-Tencor Corp. (KLAC - Free Report) in the to-be-reported quarter. However, the deal was called off following antitrust objections from the Justice Department. The Justice Department’s antitrust division cited serious concerns over the deal as the combined company could have restricted competition. Nonetheless, the fact that the company will not have to shell out a merger termination fee is a positive.

LAM RESEARCH Price and EPS Surprise

LAM RESEARCH Price and EPS Surprise | LAM RESEARCH Quote

Other 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:

CONE Midstream Partners LP has an Earnings ESP of +2.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Armstrong World Industries, Inc. (AWI - Free Report) with an Earnings ESP of +1.32% and a Zacks Rank #2.

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