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KLA-Tencor (KLAC) to Post Q4 Earnings: What's in the Cards?

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KLA-Tencor Corporation (KLAC - Free Report) is set to report fourth-quarter fiscal 2020 results on Aug 3. It delivered an earnings surprise of 5.1% in the last reported quarter.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with average surprise of 6.6%.

Fiscal Fourth-Quarter Forecasts

For the fiscal fourth quarter, the company expects revenues in the range of $1.26-$1.54 billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.40 billion, indicating growth of 11.5% from the year-ago quarter.

Memory is expected to be 39% of system revenues. Foundry is expected to constitute 51% of total shipments and Logic is anticipated to account for 10% of semi-process control system revenues.

Non-GAAP earnings are expected in the range of $1.81-$2.87 per share. The Zacks Consensus Estimate for earnings is currently pegged at $2.35 per share, indicating an increase of 32.02% from the year-ago quarter.

Performance in the Last Reported Quarter

KLA-Tencor reported fiscal third-quarter 2019 non-GAAP earnings of $2.47 per share, which beat the Zacks Consensus Estimate of $2.35.

Revenues increased 29.8% from the year-ago quarter but decreased 5.6% sequentially to $1.42 billion, surpassing the Zacks Consensus Estimate by 0.6%.

KLA Corporation Price and EPS Surprise

KLA Corporation Price and EPS Surprise

KLA Corporation price-eps-surprise | KLA Corporation Quote

Factors to Note

KLA-Tencor’s robust product portfolio has been catering to increasing demand for wafer products. Also, it has been seeing strong demand in Semiconductor Process Control systems.

The company is expected to have witnessed increased Semiconductor device demand for enterprise and cloud applications due work from home surge and a strengthening gaming market.

In addition, the company’s Gen5 optical inspection platform has been gaining momentum. Increased deployment of Gen5 for both technology development and production monitoring at the advanced nodes by customers is expected to have positively impacted top-line growth in the quarter. Increasing demand for mask inspection should have helped it to contribute to the revenue upside in the to-be-reported quarter.

The company’s efforts in bringing the EUV lithography technology to the market have been gaining momentum. These efforts, along with the expanding value of inspection and measurement in addressing critical customer problems, are expected to have driven KLA-Tencor’s performance in the to-be-reported quarter.

Foundry and logic performed well in the fiscal third quarter, a trend that most likely continued in the fiscal fourth quarter as well, driven by next-generation technology development, capacity additions at leading-edge nodes, increasing competitive dynamics and investment in EUV infrastructure.

Earnings Whispers

Our proven model predicts an earnings beat for KLA-Tencor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of +0.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, KLA-Tencor has a Zacks Rank #2.

Other Stocks That Warrant a Look

Here are a few other stocks worth considering, as our model shows that these too have the right combination of elements to deliver an earnings beat in the upcoming releases.

PerkinElmer, Inc. has an Earnings ESP of +22.13% and holds a Zacks Rank of 1.

Etsy, Inc. (ETSY - Free Report) has an Earnings ESP of +1.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

JD.com, Inc. (JD - Free Report) has an Earnings ESP of +13.79% and a Zacks Rank #1.

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