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Is a Beat in Store for Synaptics (SYNA) in Q4 Earnings?

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Synaptics Inc. (SYNA - Free Report) is set to report fiscal fourth-quarter 2018 results on Aug 9.

The company beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 2.99%.

In the last reported quarter, the company’s earnings of 92 cents per share beat the Zacks Consensus Estimate by a couple of cents. However, the figure was down 27.6% from the year-ago quarter.

Revenues of $394 million fell short of the Zacks Consensus Estimate of $401 million and declined 11.3% on a year-over-year basis.

For fiscal fourth-quarter 2018, the company anticipates revenues in the range of $370-$410 million.

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

Factors at Play   

Synaptics is well poised to benefit from a diversified product portfolio and investments in infinity displays and consumer IoT.

In the last reported quarter, Consumer IoT products (22.6%) revenues came in at $89.0 million. Per the company data, approximately $23.6 million of mobile product revenues had been reclassified as Consumer IoT revenues for the third quarter of fiscal 2018. Automotive, VR, as well as voice and video-enabled products are gaining traction.

The company’s AudioSmart, ImagingSmart and VideoSmart solutions are gaining wide scale adoption, which is a further positive. New design wins in IoT provided further impetus.

Notably, the acquisitions of Conexant Systems and Multimedia Solutions Business of Marvell Technology Group are helping it expand its customer base.

Synaptics’ focus on enhancing in-display fingerprint sensing, Touch and Display Driver Integration (TDDI) and OLED DDIC portfolio will help it counter the growing headwinds. The company expects the introduction of chip-on-film to provide new growth opportunity.

In the to-be-reported quarter, Synaptics announced that a “member of the FS9500 Clear ID family of optical in-display fingerprint sensors” was adopted by Xiaomi for its Mi8 Transparent Adventure smartphones.

However, declining revenues from mobile products due to weakness in the smartphone market is anticipated to hurt the company’s top line. Spot shortages on TDDI and DDIC products is another concern.

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.

Synaptics has a Zacks Rank #3 and its Earnings ESP is +3.83%.

Other Stocks With a Favorable Combination

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

Vishay Intertechnology, Inc. (VSH - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3.

Avnet (AVT - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #2.

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