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What's in Store for Adesto (IOTS) This Earnings Season?

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Adesto Technologies Corporation (IOTS - Free Report) fourth-quarter 2019 results are expected to benefit from strong demand for the company’s IOT related offerings.

For the quarter, the company expects revenues in the range of $32-$35 million.  

The Zacks Consensus Estimate for revenues is currently pegged at $33.6 million, indicating growth of 19.5% from the year-ago quarter.

The consensus mark for fourth-quarter earnings has been steady at 4 cents over the past 30 days. The company had reported loss of 4 cents in the year-ago reported quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters with the positive earnings surprise being 30.9% on average.

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

Factors to Consider

The company’s strong portfolio of memory and IOT-based offerings has well positioned it to address the digital transformation needs of its customers.

Adesto’s FT 6050 transceiver and the SmartServer IOT products have been witnessing growing traction among customers, which is expected to have driven top-line growth.

Notably, in third-quarter 2019, the company shipped three times as many units of its SmartServer IOT compared to the second quarter. Adesto expects this momentum to have continued in the current quarter.

Moreover, the expansion of Adesto’s partner ecosystem and sales channels is expected to have contributed to the company’s growth.

Notably, the company’s certification as an authorized Microsoft (MSFT - Free Report) Azure partner has ensured that solutions based on its SmartServer IOT is compatible with Azure-based cloud application systems and vendors.

This is expected to have attracted more customers to Adesto as a growing number of organizations are adopting Microsoft Azure as their cloud provider.

Additionally, the company announced in September that it had shipped more than 1 billion non-volatile memory devices to customers around the world. The robust demand for Adesto’s memory products is expected to have continued in the to-be reported quarter with their growing use in applications like energy metering and broad industrial control systems, among others.

Further, a strong ASIC pipeline, which includes ASICs for electrical vehicle charging and industrial robotics, is a positive.

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.

Adesto 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:

Applied Optoelectronics, Inc. (AAOI - Free Report) has an Earnings ESP of +8.12% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. (SQ - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #3.

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