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Knowles' (KN) Q4 Results Likely to Benefit From Solid Demand
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Knowles Corporation (KN - Free Report) recently offered a glimpse of fourth-quarter 2020 results when it announced preliminary expectations for the to-be-reported quarter. Despite severe market conditions triggered by the coronavirus-induced adversities, the higher expectations exhibit the operating leverage of the company’s business model. The bullish top- and bottom-line expectations had a knee-jerk reaction on the share prices, which improved 1.4% to close at $19.25 as on Jan 11, 2021.
Earlier, in concurrence with third-quarter 2020 results, Knowles had offered guidance for the fourth quarter and expected non-GAAP revenues in the range of $210-$225 million. Non-GAAP earnings were projected in the band of 27-33 cents per share. Currently, management expects non-GAAP revenues to be around $243 million, while non-GAAP earnings are likely to be within the band of 36-40 cents per share. Non-GAAP gross profit margin is estimated in the range of 37-39%, up from prior expectations of 36-38%.
The preliminary figures reflect that both revenues and earnings in the fourth quarter are likely to be well above the high end of the earlier guidance. The improved performance is likely to have been driven by better-than-expected demand for MEMS microphone in multiple markets. The company is also likely to have witnessed healthy traction in the Hearing Health business, while Precision Device revenues are expected to be within the previous guided range owing to COVID-19 woes.
Proprietary manufacturing techniques, rigorous testing and global scale of operations have facilitated Knowles to fine tune its business with the evolving customer demands and invest in high-value solutions to diversify its revenues and increase exposure to high-growth markets. The transformation from an acoustic component supplier to an audio solutions provider has enabled the company to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
Moreover, Knowles boasts an integrated design and manufacturing scale of operations that enable it to have flexibility and quick time-to-market schedule to meet clients’ needs. The company has a unique ability to balance and shift between full and semi-automation to optimize the efficiency of the operations and reduce operating expenses. Over the years, the mobile handset industry has traditionally experienced erosion in average selling prices owing to intense competition, component pricing trends, changes in demand mix, excess inventories and high obsolescence of technologically-driven components. For products that were introduced more than 18 months ago, Knowles strives to offset expected price erosion through bill of material cost reductions, yield improvements, equipment efficiency and movement to lower-cost manufacturing locations. All these attributes have probably led to an improved performance in the fourth quarter.
The stock has gained 30.2% over the past six months, while the industry has rallied 42.2%. Bottom-line estimates for 2020 have increased 12% in the past 90 days to 56 cents per share. Earnings estimates for 2021 have moved up 5.3% in the same time frame to $1.19 per share.
Airgain has a long-term earnings growth expectation of 35%. It delivered a positive earnings surprise of 62.5% in the trailing four quarters, on average.
Corning has a long-term earnings growth expectation of 2%. It delivered a positive earnings surprise of 40.7% in the trailing four quarters, on average.
Sonim delivered a positive earnings surprise of 2.2%, on average, in the trailing four quarters.
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Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Knowles' (KN) Q4 Results Likely to Benefit From Solid Demand
Knowles Corporation (KN - Free Report) recently offered a glimpse of fourth-quarter 2020 results when it announced preliminary expectations for the to-be-reported quarter. Despite severe market conditions triggered by the coronavirus-induced adversities, the higher expectations exhibit the operating leverage of the company’s business model. The bullish top- and bottom-line expectations had a knee-jerk reaction on the share prices, which improved 1.4% to close at $19.25 as on Jan 11, 2021.
Earlier, in concurrence with third-quarter 2020 results, Knowles had offered guidance for the fourth quarter and expected non-GAAP revenues in the range of $210-$225 million. Non-GAAP earnings were projected in the band of 27-33 cents per share. Currently, management expects non-GAAP revenues to be around $243 million, while non-GAAP earnings are likely to be within the band of 36-40 cents per share. Non-GAAP gross profit margin is estimated in the range of 37-39%, up from prior expectations of 36-38%.
The preliminary figures reflect that both revenues and earnings in the fourth quarter are likely to be well above the high end of the earlier guidance. The improved performance is likely to have been driven by better-than-expected demand for MEMS microphone in multiple markets. The company is also likely to have witnessed healthy traction in the Hearing Health business, while Precision Device revenues are expected to be within the previous guided range owing to COVID-19 woes.
Proprietary manufacturing techniques, rigorous testing and global scale of operations have facilitated Knowles to fine tune its business with the evolving customer demands and invest in high-value solutions to diversify its revenues and increase exposure to high-growth markets. The transformation from an acoustic component supplier to an audio solutions provider has enabled the company to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
Moreover, Knowles boasts an integrated design and manufacturing scale of operations that enable it to have flexibility and quick time-to-market schedule to meet clients’ needs. The company has a unique ability to balance and shift between full and semi-automation to optimize the efficiency of the operations and reduce operating expenses. Over the years, the mobile handset industry has traditionally experienced erosion in average selling prices owing to intense competition, component pricing trends, changes in demand mix, excess inventories and high obsolescence of technologically-driven components. For products that were introduced more than 18 months ago, Knowles strives to offset expected price erosion through bill of material cost reductions, yield improvements, equipment efficiency and movement to lower-cost manufacturing locations. All these attributes have probably led to an improved performance in the fourth quarter.
The stock has gained 30.2% over the past six months, while the industry has rallied 42.2%. Bottom-line estimates for 2020 have increased 12% in the past 90 days to 56 cents per share. Earnings estimates for 2021 have moved up 5.3% in the same time frame to $1.19 per share.
Knowles currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Airgain, Inc. (AIRG - Free Report) , Corning Incorporated (GLW - Free Report) and Sonim Technologies, Inc. (SONM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1(Strong Buy)stocks here.
Airgain has a long-term earnings growth expectation of 35%. It delivered a positive earnings surprise of 62.5% in the trailing four quarters, on average.
Corning has a long-term earnings growth expectation of 2%. It delivered a positive earnings surprise of 40.7% in the trailing four quarters, on average.
Sonim delivered a positive earnings surprise of 2.2%, on average, in the trailing four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>