PDF Solutions Inc.
) is set to report second-quarter fiscal 2014 results on Jul 28.
Last quarter, the company posted positive earnings surprise of
38.89%. Let us see how things are shaping up for this
Factors This Past Quarter
PDF reported better-than-expected first-quarter results. The
company reported higher revenues in both the Design-to-Yield
solutions and Gainshare segments, buoyed by higher customer
engagement and increase in customer volumes and performance.
The increasing user engagement and multi-year contracts with
customers are expected to remain growth catalysts in the next few
quarters. Particularly so because the ongoing technology
transitions in the semiconductor industry require the qualification
and testing of processes, which increases demand for its software
solutions and services. PDF's customers include leading foundries
like Globalfoundries and Samsung that are currently under great
pressure to improve yields on their new processes. Therefore, it is
likely to see sales momentum.
However, competition from ChipMOS TECHNOLOGIES (Bermuda) LTD and
customer concentration remain the headwinds (top 10 customers
contribute 94% of total revenue).
Our proven model does not conclusively show that PDF Solutions
is likely to beat the Zacks Consensus Estimate in the upcoming
release. This is because a stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this
is not the case here as elaborated below.
The Earnings ESP for PDF Solutions is 0.00%. This is because
both the Most Accurate estimate and the Zacks Consensus Estimate
stand at 20 cents per share.
PDF Solutions' Zacks Rank #3 (Hold) when combined with 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 revisions momentum.
Other Stocks to Consider
Here are some other companies, which are worth considering as
our model shows that they have the right combination of these two
Western Digital Corp. (
), with an Earnings ESP of +4.02% and a Zacks Rank #2 (Buy).
Iron Mountain Inc. (
), with an Earnings ESP of +7.69% and a Zacks Rank #2.
Energizer Holdings Inc. (
), with an Earnings ESP of +1.29% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
PDF SOLUTIONS (PDFS): Free Stock Analysis
WESTERN DIGITAL (WDC): Free Stock Analysis
IRON MOUNTAIN (IRM): Free Stock Analysis Report
ENERGIZER HLDGS (ENR): Free Stock Analysis
To read this article on Zacks.com click here.