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What Awaits NXP Semiconductors (NXPI) in Q1 Earnings?

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NXP Semiconductors NV (NXPI - Free Report) is set to report first-quarter 2017 results on May 3. Last quarter, the company recorded a positive earnings surprise of 21.28%. Notably, the stock outperformed the Zacks Consensus Estimate thrice while missing the same once in the trailing four quarters. It reported an average positive earnings surprise of 1.94%.

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

Factors to Consider

NXP Semiconductors, a global semiconductor company, is known for its automotive and chip identification business. It has seen massive growth in the portable device segment over the past year.

Continued strong adoption of tablets and smartphones, automotive electronics and the emergence of the new category of wearables boosted the demand for processing and sensing devices that run them. We believe that this should boost NXP Semiconductors’ first-quarter revenues.

With the acquisition of Freescale Semiconductor, NXP Semiconductors has now become the world’s leading provider of automotive semiconductor solutions and general purpose microcontroller products. We believe that this acquisition will add to the company’s first-quarter earnings as it did in the previous four quarters.

Nonetheless, macroeconomic weakness, competition from Xilinx Inc. and Lattice Semiconductor Corp., consolidation in the telecom market, declining margins and volatility in the semiconductor market remain headwinds.

NXP Semiconductors N.V. Price and EPS Surprise

 

NXP Semiconductors N.V. Price and EPS Surprise | NXP Semiconductors N.V. Quote

Earnings Whispers

Our proven model does not conclusively show that NXP Semiconductors 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: Earnings ESP for NXP Semiconductors is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.11. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: NXP Semiconductors carries a Zacks Rank #3. Though this increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

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.

Stocks to Consider

Here are a couple of companies which, per our model, have the right combination of elements to post an earnings beat this quarter:

AMTEK Inc. (AME - Free Report) , with an Earnings ESP of +1.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apple Inc. (AAPL - Free Report) , with an Earnings ESP of +1.00%, and a Zacks Rank #3.

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