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Ichor (ICHR) to Report Q4 Earnings: What's in the Offing?

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Ichor Holdings, Ltd. ICHR is set to report fourth-quarter 2019 results on Feb 5.

For fourth-quarter 2019, the company projects revenues of $189 million, which matches the Zacks Consensus Estimate and implies 33.6% growth from the year-ago quarter’s reported figure.

The company also projects non-GAAP earnings between 43 cents and 51 cents per share. The consensus mark stands at 49 cents per share, suggesting 53.1% year-over-year growth.

Notably, the company’s earnings beat the Zacks Consensus Estimate once in the trailing four quarters and missed thrice, the average negative surprise being 2.36%.

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

Ichor Holdings, Ltd. Price and EPS Surprise

Ichor Holdings, Ltd. Price and EPS Surprise

Ichor Holdings, Ltd. price-eps-surprise | Ichor Holdings, Ltd. Quote

Factors at Play

Ichor’s fourth-quarter results are likely to have benefited from higher revenues across gas panels, chemical delivery, weldments and precision machining, and increased revenues from each of its top four customers.

Moreover, improvement in the capital equipment spending environment in the fourth quarter of 2019 is likely to have boosted Ichor’s top line. Notably, strength in foundry and logic investments, as well as early trends of higher memory spending in the fourth quarter, is likely to have been a key positive.

Ichor is also expected to have shipped its first liquids delivery module beta unit to a large customer in South Korea in the fourth quarter, marking an important milestone for the company to expand footprint in Korea.

Notably, the company is expanding its addressable markets through acquisitions and continues to expand its product offerings and customer base. These are expected to have been tailwinds to the upcoming quarterly results.

Further, in the quarter under review, margins are likely to have improved with higher utilization of the cost structure and capacity additions. A highly variable cost structure with a low fixed overhead structure, as a percentage of cost of sales, is enabling Ichor to increase net income at a higher rate than sales during growth spurts. Meanwhile, this strategy is also allowing the company to mitigate the impact of cyclical downturns on its net income.

Besides, improved operating profits resulting from higher revenues and higher gross margin, combined with operating expense control measures, are expected to have been a breather. Sequentially lower interest expenses are also likely to have been a tailwind to margins.

Market share gains of about $23-$25 million across all its product lines are expected to have been another positive during the fourth quarter.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Ichor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ichor has a Zacks Rank #1 and an Earnings ESP of 0.00%.

Stocks to Consider

Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +10.80% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palo Alto Networks PANW has an Earnings ESP of +1.18% and a Zacks Rank #3.

Check Point Software Technologies (CHKP - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank of 3.

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