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Factors Setting the Tone for QuickLogic's (QUIK) Q2 Earnings

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QuickLogic Corporation (QUIK - Free Report) is set to report second-quarter 2018 results on Aug 8. Notably, the company’s earnings have surpassed the Zacks Consensus Estimate in one of the trailing four quarters, recording an average positive surprise of 5%.

The company’s adjusted loss of 5 cents per share in the last reported quarter, came in line with the Zacks Consensus Estimate and also with the year-ago quarter’s loss.

Revenues of $3 million were flat on a year-over-year basis and also met the Zacks Consensus Estimate.

What to Expect?

The Zacks Consensus Estimate for revenues is pegged at $3.1 million, up 2.3% year over year. While the Zacks Consensus Estimate for earnings are pegged at a loss of 4 cents.

Let's see how things are shaping up for this announcement.

Factors to Consider

Increasing adoption of QuikLogic’s sensor processing solutions and embedded FPGA (eFPGA) Intellectual Property (IP) Licensing is a tailwind. Further, the company’s new support center in Taiwan related to eFPGA IP has aided it in developing relationships with prospective customers, which will eventually lead to design wins.

The company’s test-chip qualification for SMIC low power 40 nanometer processes has been completed. In order to expand presence in the Chinese market, QuickLogic signed a partnership agreement with AcconSys, a prominent EDA tool and semiconductor IP distributor in China. The latter will provide the company’s flagship ArcticPro embedded FPGA solutions with sales and support services in the country. The deal is expected to be a catalyst.

Notably, QuickLogic was granted a patent for Flexible Fusion Engine (“FFE”) by the United States Patent and Trademark Office. Notably, this is utilized for always-on sensor processing in the EOS S3 multi-core processor. The company’s sensor processing segment has witnessed rapid growth driven by its EOS S3 software on a chip (SoC), which has the capability to support always-on/always listening requirement at a very low power consumption level.

As the world is moving toward voice interfaces like Amazon’s (AMZN - Free Report) Alexa, Apple’s Siri, Alphabet’s OK Google, the need for technology products that run on voice command is also increasing. This is leading to demand for this always-on feature in the mobile, wearable, hearable and battery powered IoT products industries.

This new feature is replacing the previously prevalent push-to-talk feature. The hardware architecture used for the push-to-talk feature is not considered apt for the always-on feature as it will consume more battery life. Consequently, QuickLogic’s low power consuming EOS S3 SoC with an integrated Low Power Sound Detector or LPSD is gaining wide acceptance in this scenario.

The company is witnessing increasing demand for wearable products in the B2B market, primarily driven by higher demand from hospitals and fitness focused companies, which need to track body activities and biometric information.

All these factors are likely to impact results of the to-be-reported quarter.

QuickLogic Corporation Price and EPS Surprise

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Quick Logic has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

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

Expeditors International of Washington, Inc. (EXPD - Free Report) has an Earnings ESP of +1.54% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monroe Capital Corporation (MRCC - Free Report) has an Earnings ESP of +5.98% and a Zacks Rank of 3.

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