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Lam Research (LRCX) to Report Q2 Earnings: What's in Store?

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Lam Research Corporation (LRCX - Free Report) is slated to report second-quarter fiscal 2019 results on Jan 29. In the last reported quarter, the company delivered a positive earnings surprise of 6%.

Lam Research’s surprise history has been pretty impressive. The company surpassed estimates in each of the trailing four quarters, with the average being 6.9%.

For the fiscal second quarter, the Zacks Consensus Estimate for earnings has decreased 0.3% to $3.81 per share over the past 30 days. This indicates a decline of 1.6% from the year-ago reported figure.

The consensus mark for revenues is pegged at $2.50 billion, implying a decline of 0.8% from the year-ago reported figure.

Let’s see how things have shaped up for this announcement.

Lam Research Corporation Price and EPS Surprise

 

Factors to Note

Lam Research has been witnessing improvement in the memory market, led by NAND. Increased adoption rates for 3D NAND technology, FinFETs and multi-patterning are expected to have aided its top-line growth.

Spending in the foundry and logic segment had been strong throughout 2019. The company witnessed share gains in the foundry and logic segment. All these factors are likely to have boosted Lam Research’s top-line growth in the quarter.

The company has been undertaking cost-reduction activities and density scaling for 3D NAND, as well as new memory technologies. For the quarter to be reported, it expects revenues to be $2.5 billion (+/- $150 million).

However, the company has been facing significant competition in all product and service categories in the semiconductor capital equipment market. Also, volatility in the PC market is likely to have weighed on its performance. Weakness in PCs, which may offset expansion in 3D NAND, could affect fiscal second-quarter results.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Lam Research this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of -0.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Lam Research has a Zacks Rank #3.

Stocks That Warrant a Look

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post a positive earnings surprise in the quarter to be reported.

Apple (AAPL - Free Report) has an Earnings ESP of +4.08% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

MKS Instruments, Inc. (MKSI - Free Report) has an Earnings ESP of +8.41% and a Zacks Rank of 1.

WESCO International (WCC - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank of 3.

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