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What's in Store for STMicroelectronics' (STM) Q1 Earnings?
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STMicroelectronics N.V. (STM - Free Report) is slated to report first-quarter 2020 results on Apr 22. In the last reported quarter, STMicroelectronics delivered a positive earnings surprise of 16.2%.
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is pegged at 24 cents per share. This indicates growth of 20% from the year-ago reported figure.
The consensus mark for revenues is pegged at $2.36 billion, implying growth of 13.7% from the year-ago reported figure.
Let’s see how things have shaped up prior to the earnings announcement.
In the to-be-reported quarter, the company’s well-performing products are likely to have aided its performance across all end-markets served. Moreover, the company’s higher-value products are likely to have contributed to top-line growth in the quarter.
It has been witnessing growing contract wins in areas of braking, body control and engine management. This is expected to have helped STMicroelectronics to sustain momentum in the automotive market.
The company’s robust microcontrollers, sensors, power, analog and other connectivity products should have aided top-line growth in the first quarter.
Increased usage of electronic applications in cars, especially smart cars and autonomous vehicles, is expected to have been a catalyst for its growth in the automotive market. STMicroelectronics’ expanding design wins for silicon carbide products are expected to have been another growth catalyst for this particular market.
For the quarter to be reported, the company expects net revenues to be $2.36 billion — indicating a decrease of 14.3% sequentially (+/-350 basis points [bps]) — and gross margin to be 38% (+/-200 bps).
Concerns
Weak pricing power pressure in the chip market and higher level of inventory might have hurt its performance in the first quarter.
The ongoing trade tension regarding tariffs between the United States and China, and global coronavirus-driven economic crisis are major headwinds that have been raising volatility in the semiconductor market. These are likely to pose a challenge to the upcoming quarterly results.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for the company this time around. 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.
Currently, STMicroelectronics has a Zacks Rank #4 (Sell) and an Earnings ESP of -19.72%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are a couple of 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.
Wayfair Inc. (W - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank of 2.
PTC Inc. (PTC - Free Report) has an Earnings ESP of +3.25% and a Zacks Rank of 3.
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What's in Store for STMicroelectronics' (STM) Q1 Earnings?
STMicroelectronics N.V. (STM - Free Report) is slated to report first-quarter 2020 results on Apr 22. In the last reported quarter, STMicroelectronics delivered a positive earnings surprise of 16.2%.
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is pegged at 24 cents per share. This indicates growth of 20% from the year-ago reported figure.
The consensus mark for revenues is pegged at $2.36 billion, implying growth of 13.7% from the year-ago reported figure.
Let’s see how things have shaped up prior to the earnings announcement.
STMicroelectronics N.V. Price and EPS Surprise
STMicroelectronics N.V. price-eps-surprise | STMicroelectronics N.V. Quote
Factors to Consider
In the to-be-reported quarter, the company’s well-performing products are likely to have aided its performance across all end-markets served. Moreover, the company’s higher-value products are likely to have contributed to top-line growth in the quarter.
It has been witnessing growing contract wins in areas of braking, body control and engine management. This is expected to have helped STMicroelectronics to sustain momentum in the automotive market.
The company’s robust microcontrollers, sensors, power, analog and other connectivity products should have aided top-line growth in the first quarter.
Increased usage of electronic applications in cars, especially smart cars and autonomous vehicles, is expected to have been a catalyst for its growth in the automotive market. STMicroelectronics’ expanding design wins for silicon carbide products are expected to have been another growth catalyst for this particular market.
For the quarter to be reported, the company expects net revenues to be $2.36 billion — indicating a decrease of 14.3% sequentially (+/-350 basis points [bps]) — and gross margin to be 38% (+/-200 bps).
Concerns
Weak pricing power pressure in the chip market and higher level of inventory might have hurt its performance in the first quarter.
The ongoing trade tension regarding tariffs between the United States and China, and global coronavirus-driven economic crisis are major headwinds that have been raising volatility in the semiconductor market. These are likely to pose a challenge to the upcoming quarterly results.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for the company this time around. 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.
Currently, STMicroelectronics has a Zacks Rank #4 (Sell) and an Earnings ESP of -19.72%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are a couple of 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.
Synopsys, Inc. (SNPS - Free Report) has an Earnings ESP of +2.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wayfair Inc. (W - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank of 2.
PTC Inc. (PTC - Free Report) has an Earnings ESP of +3.25% and a Zacks Rank of 3.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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