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Ultra Clean (UCTT) to Report Q4 Earnings: What's in Store?

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Ultra Clean Holdings, Inc. UCTT is scheduled to report fourth-quarter 2019 results on Feb 19.

For the quarter, the company expects revenues in the range of $260.0 million to $280.0 million.

The Zacks Consensus Estimate for revenues is pegged at $270.2 million, indicating growth of 5% from the figure reported in the year-ago quarter.

The consensus mark for fourth-quarter earnings has been steady at 25 cents per share over the past 30 days, indicating growth of 8.7% from the figure reported in the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, with positive earnings surprise of 25.4% on average.

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

Ultra Clean Holdings, Inc. Price and EPS Surprise

Ultra Clean Holdings, Inc. Price and EPS Surprise

Ultra Clean Holdings, Inc. price-eps-surprise | Ultra Clean Holdings, Inc. Quote

Factors to Consider

Ultra Clean’s fourth-quarter results are expected to benefit from improvement in demand for wafer fabrication equipment (WFE) to support the production of leading next-gen devices.

As WFE investment rises, the company’s cleaning and analytical services are likely to have become more critical to its integrated device manufacturer (IDM) and original equipment manufacturer (OEM) customers.

The company’s strong portfolio of offerings has well positioned it to capitalize on the growing demand for technology that supports 5G wireless, high-performance cloud computing, IoT and AI.

Moreover, continued strength in foundry and logic spending is expected to have driven top-line growth.

Further, Ultra Clean’s services business recovered in the third quarter after memory manufacturers increased utilization. The company expects this trend to have continued in the fourth quarter.

Its OEM customers are likely to have shifted more toward outsourcing rather than in-house, which is likely to have aided its DRAM business.  

However, Ultra Clean’s investments in expanding capacity in the form of additional hiring are likely to have kept margins under pressure.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Ultra Clean has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter: Holdings, Inc. ALRM has an Earnings ESP of +1.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Autohome Inc. (ATHM - Free Report) has an Earnings ESP of +4.84% and a Zacks Rank #2.

Tencent Holding Ltd. TCEHY has an Earnings ESP of +4.74% and a Zack Rank #2.

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