Back to top

Factors Likely to Influence Diodes' (DIOD) Earnings in Q4

Read MoreHide Full Article

Diodes Incorporated (DIOD - Free Report) is scheduled to report fourth-quarter fiscal 2018 results on Feb 13.

Notably, the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, recording average positive earnings surprise of 8%.

In the last reported quarter, Diodes delivered non-GAAP earnings of 68 cents per share, beating the Zacks Consensus Estimate by 5 cents.

Revenues increased 12.5% from the year-ago quarter to $320.9 million, almost in line with the Zacks Consensus Estimate of $321 million.

Notably, Diodes stock has returned 21.1% in the past year, outperforming industry’s rally of 15.8%.

Guidance & Estimates

For fourth-quarter fiscal 2018, management anticipates revenues to come in around $315 million (+/-3%). The corresponding Zacks Consensus Estimate is pegged at $315 million, representing an increase of approximately 17.4% from the year-ago quarter.

The Zacks Consensus Estimate for earnings has been stable ahead of fourth-quarter 2018 results and is currently pegged at 62 cents per share, representing year-over-year growth of 47.6%.

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

Factors to Consider

Plano, TX-based Diodes, a manufacturer and supplier of high-quality discrete and analog semiconductor products, is increasingly focusing on high-margin end-markets, primarily industrial, automotive and pericom products.

Notably, revenues in automotive and industrial end markets surged 27% and 32%, respectively, on a year-over-year basis, in the last reported quarter.

Robust demand of USB Type C charging and packet switches, infotainment systems, other Advanced driver-assistance systems (ADAS) solutions, Zener, Diodes bridges, and MOSFET design wins are anticipated to aid revenue growth in automotive domain.

Growing penetration of the company’s proprietary SBR technology into various automotive applications is a tailwind.

Further, strength in company’s CMOS LDO, Aris, power protection, sensor, and signal integrity solution are aiding it to garner new design wins in industrial end-market.

Diodes recently unveiled new bidirectional level shifter, PI4ULS5V108 to enable inter-IC communications across devices. The company also unveiled low power sensors (with Hall Effect) and power switches (leveraging company’s patented copper-pillar packaging technology) bode well. We believe the incremental adoption of new product launches will boost overall results in the to-be-reported quarter.

Further, synergies from Diodes’ acquired businesses — BCD Semiconductor and Anachip Corporation — are anticipated to help it in expanding presence in the broader analog market and extend its product offerings.

However, competition from the likes of Vishay Intertechnology Inc., and other semiconductor players is a concern. Moreover, Diodes’ exposure to Asian markets amid sluggishness in China remains a headwind.

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. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Diodes has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks that Warrant a Look

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Portland General Electric Company (POR - Free Report) has an Earnings ESP of +4.19% and a Zacks Rank #1. The company is slated to report fourth-quarter 2018 earnings on Feb 15. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren Corporation (AEE - Free Report) has an Earnings ESP of +1.68% and a Zacks Rank #1. The company is set to report fourth-quarter earnings on Feb 14.

ALLETE Inc (ALE - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #2. The company is scheduled to report fourth-quarter 2018 results on Feb 14.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>