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Can Broadcom (AVGO) Keep its Earnings Streak Alive in Q3?
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Leading semiconductor manufacturer Broadcom Limited (AVGO - Free Report) is scheduled to report third-quarter fiscal 2016 results after the closing bell on Sep 1. In the last reported quarter, Broadcom’s adjusted earnings comfortably exceeded the Zacks Consensus Estimate by 13 cents.
The company has beaten earnings estimates in each of the last four quarters with an average positive earnings surprise of 6.5%. Let’s see how things are shaping up for this announcement.
Key Factors to Consider
Broadcom has an extensive product portfolio, serving multiple applications within four primary end markets, i.e., wired infrastructure, wireless communications, enterprise storage and industrial & others. The company’s focus on multiple target markets and geographies mitigates operating risks and lessens the exposure to volatility in any single market. We remain upbeat about the company’s position going forward and expect it to achieve steady improvements in operating profitability with new products and technologies.
In the to-be-reported quarter, Broadcom expect a healthy demand in its wired segment despite a few potential supply constraints. The wireless segment is expected to record strong sequential revenue growth in the mid-20% range, driven by a large North American smartphone customer. The wireless connectivity business is also anticipated to drive significant innovation for mobile Wi-Fi and Bluetooth applications.
Over the years, Broadcom has established strong relationships with leading OEMs across multiple target markets. This has helped it gain key insights into customers, be more efficient and productive and better serve the target markets. In addition, Broadcom maintains an efficient global supply chain with a variable, low-cost operating model. The company outsources a majority of its manufacturing operations, assembly and test capabilities, as well as some of its corporate infrastructure functions.
Broadcom also aims to minimize capital expenditures by focusing on internal manufacturing capacities, leveraging innovative materials and processes to protect intellectual property rights while outsourcing standard complementary metal oxide semiconductor processes. These enable the company to maintain sustainable revenue growth and expand margins, much of which is likely to be replicated in the impending quarter as well.
Earnings Whispers
Our proven model conclusively shows that Broadcom is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for a successful earnings beat. This is perfectly the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is currently pegged at +0.87%.
Zacks Rank: Broadcom’s Zacks Rank #3 when combined with positive ESP makes an earnings beat likely this quarter. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Francesca's Holdings Corporation , scheduled to report earnings on Sep 7, has an Earnings ESP of +11.11% and a Zacks Rank #2.
Casey's General Stores Inc. (CASY - Free Report) , expected to report earnings on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.
Fortune Brands Home & Security Inc. , expected to report earnings on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.
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Can Broadcom (AVGO) Keep its Earnings Streak Alive in Q3?
Leading semiconductor manufacturer Broadcom Limited (AVGO - Free Report) is scheduled to report third-quarter fiscal 2016 results after the closing bell on Sep 1. In the last reported quarter, Broadcom’s adjusted earnings comfortably exceeded the Zacks Consensus Estimate by 13 cents.
The company has beaten earnings estimates in each of the last four quarters with an average positive earnings surprise of 6.5%. Let’s see how things are shaping up for this announcement.
Key Factors to Consider
Broadcom has an extensive product portfolio, serving multiple applications within four primary end markets, i.e., wired infrastructure, wireless communications, enterprise storage and industrial & others. The company’s focus on multiple target markets and geographies mitigates operating risks and lessens the exposure to volatility in any single market. We remain upbeat about the company’s position going forward and expect it to achieve steady improvements in operating profitability with new products and technologies.
BROADCOM LTD Price and EPS Surprise
BROADCOM LTD Price and EPS Surprise | BROADCOM LTD Quote
In the to-be-reported quarter, Broadcom expect a healthy demand in its wired segment despite a few potential supply constraints. The wireless segment is expected to record strong sequential revenue growth in the mid-20% range, driven by a large North American smartphone customer. The wireless connectivity business is also anticipated to drive significant innovation for mobile Wi-Fi and Bluetooth applications.
Over the years, Broadcom has established strong relationships with leading OEMs across multiple target markets. This has helped it gain key insights into customers, be more efficient and productive and better serve the target markets. In addition, Broadcom maintains an efficient global supply chain with a variable, low-cost operating model. The company outsources a majority of its manufacturing operations, assembly and test capabilities, as well as some of its corporate infrastructure functions.
Broadcom also aims to minimize capital expenditures by focusing on internal manufacturing capacities, leveraging innovative materials and processes to protect intellectual property rights while outsourcing standard complementary metal oxide semiconductor processes. These enable the company to maintain sustainable revenue growth and expand margins, much of which is likely to be replicated in the impending quarter as well.
Earnings Whispers
Our proven model conclusively shows that Broadcom is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for a successful earnings beat. This is perfectly the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is currently pegged at +0.87%.
Zacks Rank: Broadcom’s Zacks Rank #3 when combined with positive ESP makes an earnings beat likely this quarter. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Francesca's Holdings Corporation , scheduled to report earnings on Sep 7, has an Earnings ESP of +11.11% and a Zacks Rank #2.
Casey's General Stores Inc. (CASY - Free Report) , expected to report earnings on Sep 13, has an Earnings ESP of +0.56% and a Zacks Rank #3.
Fortune Brands Home & Security Inc. , expected to report earnings on Oct 19, has an Earnings ESP of +1.30% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>