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Semiconductor Stocks' Earnings on Oct 26: TXN, NXPI, SLAB
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The third-quarter reporting cycle has kept investors glued to earnings releases in the lookout for companies that are poised to beat. The results so far have been encouraging, with companies recording better earnings and revenue growth than in the past few quarters.
The Q3 earnings season is thus on track to be the first quarter to move into the positive territory, following five back-to-back quarters of decline for the S&P 500 Index. In fact, the latest Earnings Preview report (released on Oct 21, 2016) projects a 0.1% year-over-year increase in third-quarter earnings, with revenues likely to clock 1.5% growth.
Semiconductor Stocks in Focus
Semiconductor belongs to the broader technology sector and this space is expected to remain muted due to lower earnings anticipation from Apple (AAPL - Free Report) .
We note that overall Q3 earnings for the technology sector are expected to be up 1.1% year over year on a revenue decrease of 1.0%. Apple’s earnings are expected to decline 19.8% on 9.1% lower revenues, which will deal a major blow to earnings. Excluding Apple, tech sector earnings are estimated to grow 6.4%.
However, a slowdown in China, strengthening dollar and a secular decline in the PC market, might hurt semiconductor stocks.
Three semiconductor companies are set to report their quarterly numbers on Oct 26. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them this quarter:
Texas Instruments (TXN - Free Report) posted a positive earnings surprise of 11.22% last quarter. In fact, the company posted positive earnings surprises in each of the past four quarters, with an average beat of 6.68%.
Our proven model does not conclusively show that Texas Instruments will beat the Zacks Consensus Estimate in the upcoming third 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. Unfortunately, that is not the case here as elaborated below:
For the third quarter, Texas Instruments has an Earnings ESP of 0.00%. This makes surprise prediction difficult although the company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the upcoming quarter, management expects revenues between $3.34 billion and $3.62 billion (up 3.5% sequentially at the mid-point). Earnings for the quarter are expected in a range of 81 cents to 91 cents. (Read more: Will Texas Instruments Q3 Earnings Post a Surprise?)
NXP Semiconductors NV (NXPI - Free Report) recorded a positive earnings surprise of 4.50% last quarter. Also, the company outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average positive surprise of 1.04%.
For the upcoming third quarter, NXP Semiconductors has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at $1.37. It currently carries a Zacks Rank #3. Notably, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The strong adoption of tablets and smartphones, automotive electronics and the emergence of a new category of wearables should continue to boost demand for processing and sensing devices that run them. This should boost NXP Semiconductors’ third-quarter revenues. However, macroeconomic weakness, competition from Analog Devices Inc. and ON Semiconductor Corp., consolidation in the telecom market, declining margins and volatility in the semiconductor market could impact results in the to-be reported quarter. (Read more: NXP Semiconductors Q3 Earnings: What to Expect?)
Silicon Laboratories Inc. (SLAB - Free Report) recorded a positive earnings surprise of 33.33% last quarter. In fact, the company posted positive earnings surprises in each of the past four quarters, with an average beat of 55.06%.
For the upcoming third quarter, Silicon Laboratorieshas an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 42 cents. It currently carries a Zacks Rank #3.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
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Semiconductor Stocks' Earnings on Oct 26: TXN, NXPI, SLAB
The third-quarter reporting cycle has kept investors glued to earnings releases in the lookout for companies that are poised to beat. The results so far have been encouraging, with companies recording better earnings and revenue growth than in the past few quarters.
The Q3 earnings season is thus on track to be the first quarter to move into the positive territory, following five back-to-back quarters of decline for the S&P 500 Index. In fact, the latest Earnings Preview report (released on Oct 21, 2016) projects a 0.1% year-over-year increase in third-quarter earnings, with revenues likely to clock 1.5% growth.
Semiconductor Stocks in Focus
Semiconductor belongs to the broader technology sector and this space is expected to remain muted due to lower earnings anticipation from Apple (AAPL - Free Report) .
We note that overall Q3 earnings for the technology sector are expected to be up 1.1% year over year on a revenue decrease of 1.0%. Apple’s earnings are expected to decline 19.8% on 9.1% lower revenues, which will deal a major blow to earnings. Excluding Apple, tech sector earnings are estimated to grow 6.4%.
However, a slowdown in China, strengthening dollar and a secular decline in the PC market, might hurt semiconductor stocks.
Three semiconductor companies are set to report their quarterly numbers on Oct 26. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them this quarter:
Texas Instruments (TXN - Free Report) posted a positive earnings surprise of 11.22% last quarter. In fact, the company posted positive earnings surprises in each of the past four quarters, with an average beat of 6.68%.
TEXAS INSTRS Price and EPS Surprise
TEXAS INSTRS Price and EPS Surprise | TEXAS INSTRS Quote
Our proven model does not conclusively show that Texas Instruments will beat the Zacks Consensus Estimate in the upcoming third 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. Unfortunately, that is not the case here as elaborated below:
For the third quarter, Texas Instruments has an Earnings ESP of 0.00%. This makes surprise prediction difficult although the company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the upcoming quarter, management expects revenues between $3.34 billion and $3.62 billion (up 3.5% sequentially at the mid-point). Earnings for the quarter are expected in a range of 81 cents to 91 cents. (Read more: Will Texas Instruments Q3 Earnings Post a Surprise?)
NXP Semiconductors NV (NXPI - Free Report) recorded a positive earnings surprise of 4.50% last quarter. Also, the company outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average positive surprise of 1.04%.
NXP SEMICONDUCT Price and EPS Surprise
NXP SEMICONDUCT Price and EPS Surprise | NXP SEMICONDUCT Quote
For the upcoming third quarter, NXP Semiconductors has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at $1.37. It currently carries a Zacks Rank #3. Notably, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The strong adoption of tablets and smartphones, automotive electronics and the emergence of a new category of wearables should continue to boost demand for processing and sensing devices that run them. This should boost NXP Semiconductors’ third-quarter revenues. However, macroeconomic weakness, competition from Analog Devices Inc. and ON Semiconductor Corp., consolidation in the telecom market, declining margins and volatility in the semiconductor market could impact results in the to-be reported quarter. (Read more: NXP Semiconductors Q3 Earnings: What to Expect?)
Silicon Laboratories Inc. (SLAB - Free Report) recorded a positive earnings surprise of 33.33% last quarter. In fact, the company posted positive earnings surprises in each of the past four quarters, with an average beat of 55.06%.
SILICON LAB INC Price and EPS Surprise
SILICON LAB INC Price and EPS Surprise | SILICON LAB INC Quote
For the upcoming third quarter, Silicon Laboratorieshas an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 42 cents. It currently carries a Zacks Rank #3.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
Confidential from Zacks
This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today's Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here>>