Can Applied Materials (AMAT) Surprise Earnings this Season? - Analyst Blog


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Applied Materials, Inc. ( AMAT ) is set to report third-quarter 2014 results on Aug 14. Last quarter, the company posted in-line results. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company's second-quarter earnings were in line with the Zacks Consensus Estimate. Revenues of $2.35 billion were up 7.4% sequentially and 19.3% year over year, benefiting from the proliferation of mobile devices.

The first quarter was strong for Applied Materials in terms of margin growth, driven by improving mix of higher-value products in semiconductor and display as well as material cost efficiencies

For the third quarter, Applied Materials expects revenues to be flat to down 5% sequentially with non-GAAP earnings per share coming within 25-29 cents.

Earnings Whispers?

Our proven model does not conclusively show that Applied Materials will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:   Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 27 cents. Hence, the difference is 0.00%.

Zacks Rank: Appliedhas a Zacks Rank #4 (Sell) which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

Other Stocks to Consider

You could consider other stocks with a positive Earnings ESP and a favorable Zacks Rank  such as:

Myriad Genetics Inc. ( MYGN ), with an Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).

Medtronic, Inc. ( MDT ), with an Earnings ESP of +1.09% and a Zacks Rank #2 (Buy).

Callon Petroleum Company ( CPE ), with an Earnings ESP of +5.56% and a Zacks Rank #2.

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MEDTRONIC (MDT): Free Stock Analysis Report

MYRIAD GENETICS (MYGN): Free Stock Analysis Report

APPLD MATLS INC (AMAT): Free Stock Analysis Report

CALLON PETE-DEL (CPE): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: MDT , MYGN , AMAT , CPE

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