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NeoPhotonics (NPTN) to Report Q4 Earnings: What in Store?

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NeoPhotonics Corporation is scheduled to release fourth-quarter 2019 results on Feb 27.

The company expects fourth-quarter revenues of $94-$100 million. The Zacks Consensus Estimate for the same is pegged at $97.3 million, suggesting growth of 6.8% from the year-ago quarter.

NeoPhotonics anticipates non-GAAP earnings of 4-14 cents per share. The consensus mark for the same stands at 10 cents per share, indicating an improvement of 100% from the prior-year reported figure.

NeoPhotonics Corporation Price and EPS Surprise

NeoPhotonics Corporation Price and EPS Surprise

NeoPhotonics Corporation price-eps-surprise | NeoPhotonics Corporation Quote

Factors at Play

Strong demand from global customers is likely to have driven NeoPhotonics’s fourth-quarter performance. Tender activities suggest that most of the company’s products are being sold through end customers in China, which is a positive.

In the quarter under review, the company anticipates several key customers in China to have built additional inventory to overcome surges or mitigate their expected supply chain risks. This is expected to get reflected in in the fourth-quarter results.

Moreover, margins are expected to have expanded during the quarter to be reported, courtesy of cost reductions.

However, higher operating expenses thanks to increase in variable compensation are likely to have weighed on the fourth-quarter performance.

Further, initial impact of price negotiations from China customers might have kept margins under pressure.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for NeoPhotonics 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.

NeoPhotonics has an Earnings ESP of 0.00% and a Zacks Rank #3.

Stocks to Consider

Here are a few stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season:

Anterix Inc. (ATEX - Free Report) has an Earnings ESP of +6.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ANSYS, Inc. (ANSS - Free Report) has an Earnings ESP of +2.01% and a Zacks Rank #3.

CrowdStrike Holdings Inc. (CRWD - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank of 3.

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