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Semiconductor Stocks' Q2 Earnings on Aug 7: VSH, DIOD, MXL

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The Q2 earnings season is drawing to a close, with results from 381 S&P 500 members on board as of Aug 2.

Per the latest Earnings Preview, approximately 80.1% of the companies delivered positive earnings surprises, while 73.8% surpassed top-line expectations. Earnings of these companies grew 25% from the comparable period last year, while revenues were up 10.4%.

Moreover, the report indicates that the overall second-quarter earnings for the S&P 500 companies are expected to exhibit year-over-year growth of 23.9%. Further, total revenues are also projected to grow 9.3% from the year-ago quarter.

Technology is one of the 14 sectors which is anticipated to report double-digit earnings growth this quarter. Per the report, total earnings for the tech sector are projected to be up 31.6% while revenues are expected to be 12.2% higher on a year-over-year basis.

The sector continues to benefit from growing adoption of augmented reality (AR)/virtual reality (VR) devices, emerging trends of artificial intelligence (AI), machine learning, cloud computing, autonomous vehicles and IoT services.

All these factors make the technology sector heavily dependent on semiconductor industry. Further, the sector is also riding on the ongoing technical advancement in the electronic devices as it requires a massive number of  chips and other semiconductors items.

Consequently, we conclude that semiconductors are ubiquitous and this will continue to benefit the semiconductor industry in the near term as well as in the long haul. Additionally, the building of 5G stations on a large scale worldwide is expected to drive growth in this particular industry.

However, this does not imply an earnings beat for all the companies operating in this particular industry as growth prospects of a company depends primarily on its fundamentals, strategic plans and demand for its product.

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.

Meanwhile, we caution against the stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Here we take a look at three semiconductor stocks that are set to report second-quarter 2018 results on Aug 7.

Vishay Intertechnology, Inc. (VSH - Free Report) is a manufacturer of discrete semiconductors and passive electronic components which are utilized in all types of electronic devices and equipment.

Notably, the company topped the Zacks Consensus Estimate in three of the trailing four quarters while missing once, recording an average positive earnings surprise of 4.85%.

The Zacks Consensus Estimates for earnings and revenues in the second quarter are pegged at 48 cents and $767.5 million, respectively.

If the estimates are compared with the actual year-ago quarter figures, then earnings and revenues exhibit growth of 33.3% and 19%, respectively.

Nevertheless, the company has a favorable combination of a Zacks Rank #1 and an Earnings ESP of +2.41%. Consequently, our proven model indicates that the company is likely to beat earnings estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Diodes Incorporated (DIOD - Free Report) is a manufacturer and supplier of high-quality discrete and analog semiconductor products, primarily to the communications, computing, industrial, consumer electronics and automotive markets.

Notably, the company has delivered an average positive earnings surprise of 4.73% by beating the Zacks Consensus Estimate in the trailing four quarters.

The Zacks Consensus Estimates for earnings and revenues in the to-be reported quarter are pegged at 54 cents and $300 million, respectively.

On comparison of these estimated figures with the reported figures of previous year quarter, the earnings and revenues reflect growth of 50% and 13.6%, respectively.

The company has a Zacks Rank #1 but an Earnings ESP of 0.00%. Per our proven model, this unfavorable combination makes surprise prediction difficult.

MaxLinear, Inc. (MXL - Free Report) offers radio-frequency analog and mixed signal semiconductor SoC solutions which are used in broadband communication applications offering small silicon die-size, and low power consumption.

Notably, the company has delivered an average positive earnings surprise of 9.87% by beating the Zacks Consensus Estimate in the trailing four quarters.

MaxLinear carries a Zacks Rank #4 and an Earnings ESP of -0.26%. Consequently, the company is unlikely to beat estimates in this earnings season.

The Zacks Consensus Estimates for the earnings and revenues in the to-be-reported quarter are pegged at 32 cents and $103.9 million, respectively.

On comparison with the reported figures of year-ago quarter, earnings and revenues reflect a decline of 8.6% and 0.3%, respectively.

MaxLinear, Inc Price and EPS Surprise

MaxLinear, Inc Price and EPS Surprise | MaxLinear, Inc Quote

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Diodes Incorporated (DIOD) - free report >>

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