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Ambarella (AMBA) Q2 Earnings: Is Disappointment in Store?
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Ambarella Inc. (AMBA - Free Report) is slated to release second-quarter fiscal 2019 results on Aug 30.
Notably, Ambarella beat estimates in the trailing four quarters, with an average positive surprise of 21.6%.
In the last reported quarter, the company posted mixed results, wherein earnings surpassed the Zacks Consensus Estimate but revenues marginally fell short of the same. Moreover, on a year-over-year basis, its top- and bottom-line registered decline.
For second-quarter fiscal 2019, revenues are expected between $60 million and $64 million (mid-point $62 million), down 10.6-16.2% from the year-earlier quarter.
The Zacks Consensus Estimate for the quarter under review is pegged at earnings of 13 cents, which reflects a year-over-year decline of 72.9%. Additionally, the consensus estimate for revenues is $62.3 million, indicating 13% decline from the year-ago quarter.
So, let’s see how things are shaping up prior to this announcement.
Key Factors
Ambarella is well known for its market leading high performance video processing system on a chip (SoCs), which consume the lowest power in this space, providing it a cost and power advantage over its rivals. The company is benefiting from automotive and IP security markets which, per management, represent a large and expanding opportunity.
However, the company is hurt by considerable decline in revenues from the drone market. Per the company, drone manufacturers have been witnessing a tough time and its major clients are now shifting focus on building low-priced drones. Moreover, weakness in sports and the VR camera markets poses significant concern.
The company anticipates GoPro (GPRO - Free Report) revenues to be insignificant to the soon-to-be-reported-quarter. Moreover, the trade war between the United States and China is a significant risk for the company’s growth prospects.
Furthermore, increase in China security revenues and decline in drone revenues are anticipated to impact margins negatively. Increase in operating expenses due to “increased chip tape out fees and engineering headcount” will remain an overhang.
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. Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ambarella currently carries a Zacks Rank #3 but has an Earnings ESP of -5.92%.
Stocks With a Favorable Combination
Here are two companies, which, as per our model, have the right combination of elements to post an earnings beat this quarter:
SCIENCE APPLICATIONS (SAIC - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Ambarella (AMBA) Q2 Earnings: Is Disappointment in Store?
Ambarella Inc. (AMBA - Free Report) is slated to release second-quarter fiscal 2019 results on Aug 30.
Notably, Ambarella beat estimates in the trailing four quarters, with an average positive surprise of 21.6%.
In the last reported quarter, the company posted mixed results, wherein earnings surpassed the Zacks Consensus Estimate but revenues marginally fell short of the same. Moreover, on a year-over-year basis, its top- and bottom-line registered decline.
For second-quarter fiscal 2019, revenues are expected between $60 million and $64 million (mid-point $62 million), down 10.6-16.2% from the year-earlier quarter.
The Zacks Consensus Estimate for the quarter under review is pegged at earnings of 13 cents, which reflects a year-over-year decline of 72.9%. Additionally, the consensus estimate for revenues is $62.3 million, indicating 13% decline from the year-ago quarter.
Ambarella, Inc. Price and EPS Surprise
Ambarella, Inc. Price and EPS Surprise | Ambarella, Inc. Quote
So, let’s see how things are shaping up prior to this announcement.
Key Factors
Ambarella is well known for its market leading high performance video processing system on a chip (SoCs), which consume the lowest power in this space, providing it a cost and power advantage over its rivals. The company is benefiting from automotive and IP security markets which, per management, represent a large and expanding opportunity.
However, the company is hurt by considerable decline in revenues from the drone market. Per the company, drone manufacturers have been witnessing a tough time and its major clients are now shifting focus on building low-priced drones. Moreover, weakness in sports and the VR camera markets poses significant concern.
The company anticipates GoPro (GPRO - Free Report) revenues to be insignificant to the soon-to-be-reported-quarter. Moreover, the trade war between the United States and China is a significant risk for the company’s growth prospects.
Furthermore, increase in China security revenues and decline in drone revenues are anticipated to impact margins negatively. Increase in operating expenses due to “increased chip tape out fees and engineering headcount” will remain an overhang.
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. Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ambarella currently carries a Zacks Rank #3 but has an Earnings ESP of -5.92%.
Stocks With a Favorable Combination
Here are two companies, which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Entegris, Inc. (ENTG - Free Report) has an Earnings ESP of +0.51% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
SCIENCE APPLICATIONS (SAIC - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>