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Silicon Motion (SIMO) to Post Q3 Earnings: What to Expect?

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Silicon Motion Technology (SIMO - Free Report) is set to release third-quarter 2021 results on Oct 27.

The company reported impressive preliminary results. Silicon Motion now expects sequential revenue growth to exceed the high end of its original guidance of 7.5-12.5%, issued on Jul 30, 2021.

For third-quarter 2021, Silicon Motion expects non-GAAP revenues in the range of $238-$249 million. The Zacks Consensus Estimate for the same is currently pegged at $245.7 million, which represents year-over-year growth of 94.9%.

Gross margin for the to-be-reported quarter is now anticipated to slightly exceed 50%, which falls within the previously mentioned guidance range of 48.5%-50.5%. However, the company did not provide any update on its non-GAAP operating margin metrics. It formerly guided non-GAAP operating margin to be 27.5-29.5%.

The consensus mark for third-quarter earnings has increased to $1.62 per share in the past 30 days, which suggests growth of 113.2% from the figure reported in the year-ago quarter.
 

Silicon Motion’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, delivering an earnings surprise of 16%, on average.

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

Factors To Consider

Silicon Motion is one of the leading providers of NAND flash-based controllers for solid-state storage devices or SSDs.

Revenues for the third quarter of 2021 are likely to have benefited from continued momentum in SSD controller sales, as well as healthy sales of eMMC and UFS controllers.

Markedly, in second-quarter 2021, SSD controller sales grew 30-35%, sequentially. Silicon Motion has been gaining market share, driven by strong demand for PCIe Gen3 SSD controllers from a diversified set of NAND flash and Tier one module-maker customers.

New design wins for PCIe Gen4 SSD controllers from NAND makers are expected to have aided Silicon Motion’s third-quarter results. The company launched its new SM2320 single-chip, high-performance, low-power, cost-effective solution for external portable SSDs during the to-be-reported quarter.

However, soft PC shipments, hurt by supply chain constraints, are anticipated to have hurt Silicon Motion’s third-quarter 2021 results.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Silicon Motion has an Earnings ESP of +2.79% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are a few other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases:

Alphabet (GOOGL - Free Report) has an Earnings ESP of +7.71% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International (CACI - Free Report) has an Earnings ESP of +4.43% and carries a Zacks Rank of 2, at present.

Advanced Micro Devices (AMD - Free Report) has an Earnings ESP of +2.31% and carries a Zacks Rank of 2, at present.