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ASE Technology (ASX) to Report Q1 Earnings: What's in Store?

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ASE Technology Holding Co., Ltd. (ASX - Free Report) is set to report first-quarter 2020 results on Apr 29.

For the first quarter, the company expects ATM segment revenues to be between second- and third-quarter 2019 reported figures of NT$59.6 billion and NT$67.9 billion, respectively. While EMS segment revenues are expected to be unchanged from the prior-year quarter’s figure of NT$35 billion.

Notably, the company has announced unaudited consolidated revenues of NT$37.9 billion ($1.3 billion) for March, NT$28.1 billion ($939 million) for February and NT$31.3 billion ($1.04 billion) for January.

Q4 at a Glance

In fourth-quarter 2019, the company reported revenues of NT$116 billion, up 1.7% from the year-ago quarter’s reported figure but down 1.3% sequentially.

Diluted earnings during the quarter were NT$1.47 ($0.096 per ADS) per share, up 18.5% from the year-ago quarter’s reported quarter and 10.5% sequentially.

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

Advanced Semiconductor Engineering, Inc. Price and EPS Surprise

 

 

Factors to Consider

Robust adoption of the company’s test solutions is expected to have driven the company’s ATM segment revenues in the quarter under review.

Moreover, solid traction for system-in-package (SiP) products is likely to have boosted EMS revenue growth in the to-be-reported quarter.

In 2019, the company generated EMS revenues of $165.9 billion, up 9% year over year, driven by growth within SiP products. The momentum is likely to have continued in the quarter to be reported owing to the growing popularity of 5G-related devices.

Further, due to a decline in input-output density for shrinking, there is an ongoing momentum in fan-out packaging methods on the next foundry node. This is expected to get reflected in first-quarter results.

Additionally, the company’s investments in geographical expansion are likely to have aided it in acquiring new customers. This is anticipated to have driven top-line growth in the to-be-reported quarter.

However, increased expenditure on Research & Development (R&D) and employee compensation are likely to have kept margins under pressure.

Moreover, the global coronavirus pandemic has led to a shortage of labor for the company. This has caused delays in production, which is expected to have had a negative impact on revenues. Supply-chain disruptions due to the crisis are also likely to have been a headwind in the first quarter.

Zacks Rank & Other Stocks to Consider

ASE Technology currently sports a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Avid Technology, Inc. , Netlist, Inc. (NLST - Free Report) and OSI Systems, Inc. (OSIS - Free Report) , which sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Avid, Netlist and OSI is currently pegged at 20%, 15% and 18%, respectively.

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