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KEMET (KEM) Q2 Earnings to Gain on High Capacitor Demand
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KEMET Corporation (KEM - Free Report) is set to report second-quarter fiscal 2019 results on Oct 30.
Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average positive surprise of 19.9%. In the last reported quarter, the company’s adjusted earnings outpaced the Zacks Consensus Estimate by eight cents.
Moreover, KEMET’s top line beat the consensus mark in all the trailing four quarters. In first-quarter fiscal 2019, revenues came in at $327.6 million, beating the Zacks Consensus Estimate of $318 million and increased 19.6% from the year-ago quarter.
The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $335.7 million, which reflects year-over-year growth of 11.4%. Moreover, the consensus mark for earnings has been steady at 61 cents over the last seven days.
Let’s see how things are shaping up prior to this announcement.
Factors to Watch Out For
KEMET is expected to benefit from strong demand for capacitors, primarily due to supply constraints of Multilayer Ceramic Capacitors (MLCC). The company is also one of the world’s largest tantalum capacitor manufacturers.
The demand for MLCC, a passive component, is much higher than current supply, driven by growing proliferation in wireless connective and automotive applications. Hence, producers like KEMET are expanding their MLCC production capacity rapidly.
The shortage is so acute that a customer recently agreed to pay KEMET $36 million upfront (over the next 18-24 months) to guarantee supply. Management stated that the fund will be used to expand MLCC capacity in Mexico.
KEMET is also benefiting from reduced product offerings from Japanese competitors. Further, the company’s top-line growth is likely to benefit from better pricing in the to-be-reported quarter.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
KEMET has a Zacks Rank #3 and an Earnings ESP of +0.55%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:
AMETEK (AME - Free Report) has a Zacks Rank #2 and an Earnings ESP of +0.71%.
Generac Holdings (GNRC - Free Report) has a Zacks Rank #2 and an Earnings ESP of +3.19%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
KEMET (KEM) Q2 Earnings to Gain on High Capacitor Demand
KEMET Corporation (KEM - Free Report) is set to report second-quarter fiscal 2019 results on Oct 30.
Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average positive surprise of 19.9%. In the last reported quarter, the company’s adjusted earnings outpaced the Zacks Consensus Estimate by eight cents.
Moreover, KEMET’s top line beat the consensus mark in all the trailing four quarters. In first-quarter fiscal 2019, revenues came in at $327.6 million, beating the Zacks Consensus Estimate of $318 million and increased 19.6% from the year-ago quarter.
The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $335.7 million, which reflects year-over-year growth of 11.4%. Moreover, the consensus mark for earnings has been steady at 61 cents over the last seven days.
Let’s see how things are shaping up prior to this announcement.
Factors to Watch Out For
KEMET is expected to benefit from strong demand for capacitors, primarily due to supply constraints of Multilayer Ceramic Capacitors (MLCC). The company is also one of the world’s largest tantalum capacitor manufacturers.
The demand for MLCC, a passive component, is much higher than current supply, driven by growing proliferation in wireless connective and automotive applications. Hence, producers like KEMET are expanding their MLCC production capacity rapidly.
Kemet Corporation Price and EPS Surprise
Kemet Corporation Price and EPS Surprise | Kemet Corporation Quote
The shortage is so acute that a customer recently agreed to pay KEMET $36 million upfront (over the next 18-24 months) to guarantee supply. Management stated that the fund will be used to expand MLCC capacity in Mexico.
KEMET is also benefiting from reduced product offerings from Japanese competitors. Further, the company’s top-line growth is likely to benefit from better pricing in the to-be-reported quarter.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
KEMET has a Zacks Rank #3 and an Earnings ESP of +0.55%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:
Apple (AAPL - Free Report) has an Earnings ESP of +1.35% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AMETEK (AME - Free Report) has a Zacks Rank #2 and an Earnings ESP of +0.71%.
Generac Holdings (GNRC - Free Report) has a Zacks Rank #2 and an Earnings ESP of +3.19%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>