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Ambarella (AMBA) to Report Q4 Earnings: What's in Store?
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Ambarella, Inc. (AMBA - Free Report) is set to report fourth-quarter fiscal 2017 results on Feb 28. Last quarter, the company posted a positive earnings surprise of 23.53%. Notably, the stock has outperformed the Zacks Consensus Estimate in the preceding four quarters with an average positive earnings surprise of 63%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Ambarella develops chips for the high-definition (HD) video capture market and is currently witnessing increasing demand for its products. Ambarella’s major client is GoPro (GPRO - Free Report) . The chipmaker’s technology is used in GoPro’s first person point-of-view cameras, allowing users to take videos from snowboards, surfboards, or car dashboards.
We believe that Ambarella’s fourth quarter revenues will get a boost from increased sales of GoPro's cameras. According to Brad Erickson, an analyst at Pacific Crest, GoPro's camera sales have been better-than-expected during the holiday season.
Moreover, we believe that the company’s partnership with Alphabet Inc. (GOOGL - Free Report) for its “Helpouts” services will also be a revenue growth catalyst this quarter. These services help users with a range of jobs from fixing their cars to taking art lessons, through a video camera connected to Wi-Fi or Bluetooth network.
Further, Ambarella has been trying to expand its reach in other markets, such as IP security, automotive, and drones/flying cameras as evident from its Jul 2016 acquisition of VisLab S.r.l. in an all-cash deal worth $30 million.
Although Ambarella’s move of diversifying its business is encouraging, we do not expect any material impact of these initiatives on fourth-quarter results.
Additionally, the company has long been criticized for lack of innovation. According to Citron Research, the company faces severe commoditization risks and hence stiff competition. We believe this may negatively impact the company’s overall performance.
Earnings Whispers
Our proven model does not conclusively show that Ambarella will beat earnings estimates 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 49 cents. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Ambarella carries a Zacks Rank #4 (Sell). Note that 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 Priceline Group Inc. has an Earnings ESP of +0.46% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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Ambarella (AMBA) to Report Q4 Earnings: What's in Store?
Ambarella, Inc. (AMBA - Free Report) is set to report fourth-quarter fiscal 2017 results on Feb 28. Last quarter, the company posted a positive earnings surprise of 23.53%. Notably, the stock has outperformed the Zacks Consensus Estimate in the preceding four quarters with an average positive earnings surprise of 63%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Ambarella develops chips for the high-definition (HD) video capture market and is currently witnessing increasing demand for its products. Ambarella’s major client is GoPro (GPRO - Free Report) . The chipmaker’s technology is used in GoPro’s first person point-of-view cameras, allowing users to take videos from snowboards, surfboards, or car dashboards.
We believe that Ambarella’s fourth quarter revenues will get a boost from increased sales of GoPro's cameras. According to Brad Erickson, an analyst at Pacific Crest, GoPro's camera sales have been better-than-expected during the holiday season.
Moreover, we believe that the company’s partnership with Alphabet Inc. (GOOGL - Free Report) for its “Helpouts” services will also be a revenue growth catalyst this quarter. These services help users with a range of jobs from fixing their cars to taking art lessons, through a video camera connected to Wi-Fi or Bluetooth network.
Further, Ambarella has been trying to expand its reach in other markets, such as IP security, automotive, and drones/flying cameras as evident from its Jul 2016 acquisition of VisLab S.r.l. in an all-cash deal worth $30 million.
Although Ambarella’s move of diversifying its business is encouraging, we do not expect any material impact of these initiatives on fourth-quarter results.
Additionally, the company has long been criticized for lack of innovation. According to Citron Research, the company faces severe commoditization risks and hence stiff competition. We believe this may negatively impact the company’s overall performance.
Earnings Whispers
Our proven model does not conclusively show that Ambarella will beat earnings estimates 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 49 cents. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Ambarella carries a Zacks Rank #4 (Sell). Note that 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.
Ambarella, Inc. Price and EPS Surprise
Ambarella, Inc. Price and EPS Surprise | Ambarella, Inc. Quote
Stocks to Consider
Here are a couple of stocks that you may consider, as our model shows that they have the right combination of elements to post an earnings beat:
Pure Storage Inc. (PSTG - Free Report) has an Earnings ESP of +4.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Priceline Group Inc. has an Earnings ESP of +0.46% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>