) is set to report third-quarter fiscal 2014 results on Aug 20.
Last quarter, the company posted a negative earnings surprise of
6.7%. However, it is worth noting that Synopsys has outperformed
the Zacks Consensus Estimate in three out of the four preceding
quarters with a positive earnings surprise average of 33.9%.
Let us see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Synopsys reported mixed second-quarter 2014 results, with earnings
missing the Zacks Consensus Estimate while revenues beat the same.
Revenues improved on a year-over-year basis, impacted by higher
adoption of Synopsys' products.
We believe the company's recent product launches, acquisitions and
deal wins will boost results, going ahead. Moreover, the unique
intellectual properties and global support provided by the company
will likely drive its forthcoming results. Additionally, the
company's acquisition of Coverity will expand Synopsys' reach in
the software quality, testing and security tools market.
It is worth mentioning that recently, Synopsys collaborated with
Intel Corp (
) to facilitate the adoption of Intel's 14 nanometer (nm) Tri-Gate
process technology by Intel Custom Foundry customers.
However, competition from Cadence Design Systems Inc. and Mentor
Graphics Corp. coupled with a challenging technology spending
environment and uncertainty regarding proper time to realize
acquisition synergies keep us on the sidelines.
Our proven model does not conclusively show that Synopsys will beat
earnings this quarter. That is because a stock needs to have both a
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Both the Most Accurate estimate and the Zacks Consensus Estimate
stand at 35 cents. Hence, the difference is 0.00%.
Synopsys' Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes
surprise prediction difficult.
We caution against stocks with Zacks Ranks #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 you may consider as our model
shows that they have the right combination of elements to post an
earnings beat this quarter:
Nimble Storage, Inc. (
), with Earnings ESP of +25.00% and a Zacks Rank #3
GameStop Corp. (
), with Earnings ESP of +10.53% and a Zacks Rank #3
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