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Microchip (MCHP) to Post Q2 Earnings: Is a Beat in the Cards?
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Microchip Technology Incorporated (MCHP - Free Report) is slated to release second-quarter fiscal 2021 results on Nov 5.
On Sep 9, Microchip revised its revenue and earnings guidance for fiscal second quarter to adjust for recovery in automotive and industrial end markets amid stabilizing demand in data center and computing markets.
Per the updated outlook, the company now anticipates fiscal second-quarter net sales to decline in the range of 2-6% (mid-point indicating decline of 4%) sequentially.
Notably, the Zacks Consensus Estimate for fiscal second-quarter revenues is currently pegged at $1.26 billion, suggesting a decline of 5.9% from the year-ago quarter and 3.9% sequentially.
Non-GAAP earnings are now projected between $1.30 and $1.52 per share.
In the past 30 days, the Zacks Consensus Estimate for fiscal second-quarter earnings has been steady at $1.42 per share, indicates a decline of 0.7% from the prior-year reported figure.
Factors Likely to Have Influenced Q2 Performance
Microchip’s fiscal second-quarter results are likely to reflect gains from demand recovery across automotive and industrial end markets on easing of lockdowns and relaxation in shelter-in-place guidelines.
Microchip Technology Incorporated Price and EPS Surprise
Markedly, management noted that the company had witnessed strong booking activity for the months of July and August.
Nevertheless, management stated that the end-market demand from data centers and computing that had earlier gained from the work-from-home trend is now weakening.
The company is also anticipated to have witnessed strength in medical end market, courtesy by growth in demand for hospital equipment like ventilators, oxygen monitors, respirators, ultrasound machines and other COVID-19 related items. This might have contributed to the fiscal second-quarter performance.
Incremental adoption of microcontrollers, primarily the latest Bluetooth 5.0 dual-mode audio solutions, is likely to have benefited Microchip’s fiscal second-quarter performance. Robust demand for 8-bit, 16-bit and 32-bit microcontrollers might have contributed to the performance in the quarter to be reported.
Additionally, incremental adoption of the company’s META-DX1 suite of Ethernet products may have driven microcontrollers’ fiscal second-quarter performance.
Microchip’s fiscal second-quarter results are likely to reflect synergies from acquisitions including Microsemi, Micrel and Atmel.
Further, solid momentum of Microsemi’s solutions in Data Center, and Communications end-markets might have benefited the to-be-reported quarter’s performance.
Besides, improving demand across office equipment and communication infrastructures on account of requirement for cloud computing solutions amid the coronavirus crisis-led work-from-home wave also bodes well.
Also, gains from design wins for Microchip’s latest PolarFire imaging solutions, primarily for 4K high resolutions, might get reflected in FPGA (or Field Programmable Gate Array) revenues in the fiscal second quarter. Further, the incremental adoption of new RT PolarFire FPGA that supports high-performance requirements of complex space applications may have contributed to the fiscal second-quarter performance.
However, broad-based coronavirus crisis-induced macroeconomic weakness and headwinds pertaining to Huawei ban are likely to have weighed on the fiscal second-quarter performance.
Furthermore, increasing expenses on product development amid stiff competition from peers including Cirrus Logic and Silicon Laboratories are likely to have limited margin expansion in the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Microchip 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.
Microchip has an Earnings ESP of +4.01% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks that Warrant a Look
Here are some other stocks worth considering as our proven model shows that these too have the right combination of elements to beat on earnings this season.
NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #2 at present.
Marchex, Inc. (MCHX - Free Report) has an Earnings ESP of +16.67% and currently carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 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
Microchip (MCHP) to Post Q2 Earnings: Is a Beat in the Cards?
Microchip Technology Incorporated (MCHP - Free Report) is slated to release second-quarter fiscal 2021 results on Nov 5.
On Sep 9, Microchip revised its revenue and earnings guidance for fiscal second quarter to adjust for recovery in automotive and industrial end markets amid stabilizing demand in data center and computing markets.
Per the updated outlook, the company now anticipates fiscal second-quarter net sales to decline in the range of 2-6% (mid-point indicating decline of 4%) sequentially.
Notably, the Zacks Consensus Estimate for fiscal second-quarter revenues is currently pegged at $1.26 billion, suggesting a decline of 5.9% from the year-ago quarter and 3.9% sequentially.
Non-GAAP earnings are now projected between $1.30 and $1.52 per share.
In the past 30 days, the Zacks Consensus Estimate for fiscal second-quarter earnings has been steady at $1.42 per share, indicates a decline of 0.7% from the prior-year reported figure.
Factors Likely to Have Influenced Q2 Performance
Microchip’s fiscal second-quarter results are likely to reflect gains from demand recovery across automotive and industrial end markets on easing of lockdowns and relaxation in shelter-in-place guidelines.
Microchip Technology Incorporated Price and EPS Surprise
Microchip Technology Incorporated price-eps-surprise | Microchip Technology Incorporated Quote
Markedly, management noted that the company had witnessed strong booking activity for the months of July and August.
Nevertheless, management stated that the end-market demand from data centers and computing that had earlier gained from the work-from-home trend is now weakening.
The company is also anticipated to have witnessed strength in medical end market, courtesy by growth in demand for hospital equipment like ventilators, oxygen monitors, respirators, ultrasound machines and other COVID-19 related items. This might have contributed to the fiscal second-quarter performance.
Incremental adoption of microcontrollers, primarily the latest Bluetooth 5.0 dual-mode audio solutions, is likely to have benefited Microchip’s fiscal second-quarter performance. Robust demand for 8-bit, 16-bit and 32-bit microcontrollers might have contributed to the performance in the quarter to be reported.
Additionally, incremental adoption of the company’s META-DX1 suite of Ethernet products may have driven microcontrollers’ fiscal second-quarter performance.
Microchip’s fiscal second-quarter results are likely to reflect synergies from acquisitions including Microsemi, Micrel and Atmel.
Further, solid momentum of Microsemi’s solutions in Data Center, and Communications end-markets might have benefited the to-be-reported quarter’s performance.
Besides, improving demand across office equipment and communication infrastructures on account of requirement for cloud computing solutions amid the coronavirus crisis-led work-from-home wave also bodes well.
Also, gains from design wins for Microchip’s latest PolarFire imaging solutions, primarily for 4K high resolutions, might get reflected in FPGA (or Field Programmable Gate Array) revenues in the fiscal second quarter. Further, the incremental adoption of new RT PolarFire FPGA that supports high-performance requirements of complex space applications may have contributed to the fiscal second-quarter performance.
However, broad-based coronavirus crisis-induced macroeconomic weakness and headwinds pertaining to Huawei ban are likely to have weighed on the fiscal second-quarter performance.
Furthermore, increasing expenses on product development amid stiff competition from peers including Cirrus Logic and Silicon Laboratories are likely to have limited margin expansion in the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Microchip 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.
Microchip has an Earnings ESP of +4.01% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks that Warrant a Look
Here are some other stocks worth considering as our proven model shows that these too have the right combination of elements to beat on earnings this season.
Advanced Energy Industry, Inc. (AEIS - Free Report) presently has an Earnings ESP of +1.03% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #2 at present.
Marchex, Inc. (MCHX - Free Report) has an Earnings ESP of +16.67% and currently carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 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 >>