Back to top

Image: Bigstock

Factors Setting the Tone for Ambarella's (AMBA) Q3 Earnings

Read MoreHide Full Article

Ambarella, Inc. (AMBA - Free Report) is slated to release third-quarter fiscal 2021 results on Nov 23.

For the fiscal third quarter, the company estimates revenues between $52 million and $56 million. The Zacks Consensus Estimate for the same is pegged at $54.1 million, indicating a 20.4% year-over-year decline.

For the bottom line, the consensus mark is pegged at earnings of 5 cents per share, calling for a year-over-year plunge of 84.4%.

In the last reported quarter, the company’s non-GAAP earnings per share were 6 cents, significantly lower than the year-ago quarter’s earnings of 72.7%. Further, revenues slid 11.1% year on year to $50.1 million.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average surprise being 242.3%.

Let’s see how things have shaped up for this announcement.

Key Factors to Consider

Business disruptions in China and non-China regions amid the coronavirus pandemic-induced global lockdown are expected to have hurt Ambarella’s fiscal third-quarter performance. During the first quarter of fiscal 2021, the company had witnessed some order push as well as cancellations due to the pandemic-led business disruptions.

Moreover, softness in the automotive camera market is likely to have negatively impacted Ambarella’s overall revenue performance during the quarter under review.

Nonetheless, Ambarella’s quarterly results are anticipated to reflect strong design wins and customer engagement with its AI-enabled video-processing chips in the consumer security camera. The company is gaining from solid momentum in CV2, CV22 and CV25. Notably, in fiscal 2020, these products generated production revenues from 1,000 customers.

Moreover, during the fiscal second quarter, Ambarella witnessed increase in blended average selling price (ASP) on solid demand for CV SoC which carries a higher ASP compared with non-CV solutions. We believe the trend would have continued into the fiscal third quarter.

What Our Model Says

Our proven model does not predict an earnings beat for Ambarella this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Ambarella currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

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

Titan Machinery Inc. (TITN - Free Report) has an Earnings ESP of +17.50% and sports a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

BJs Wholesale Club Holdings, Inc. (BJ - Free Report) has an Earnings ESP of +21.26% and carries a Zacks Rank of 2, currently.

DocuSign (DOCU - Free Report) has an Earnings ESP of +4.35% and currently holds a Zacks Rank of 3.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Published in