Applied Materials, Inc.
) is set to report first-quarter 2014 results on Feb 12. Last
quarter, it posted a 5.6% positive surprise. Let's see how things
are shaping up for this announcement.
Growth Factors this Past Quarter
The company's fourth-quarter earnings exceeded the Zacks
Consensus Estimate by a penny. Revenues of $1.99 billion were
flat sequentially but up 20.8% year over year, benefiting from
the proliferation of mobile devices, partially offset by slowing
sales in China.
The fourth quarter was weak for Applied Materials in terms of
margin growth. This was mainly impacted by a $20 million charge
for a customs duty assessment in the Applied Global Services
segment as well as a $10 million inventory charge in the Display
For the first quarter, Applied Materials expects revenues to
be up 3%-10% with Silicon Systems Group increasing 15%-20%, but
Applied Global Services and Display down a respective 5%-10% and
15%-30%, and Energy and Environmental Solutions remaining roughly
flat. Earnings per share (excluding 4 cents of
acquisition-related charges) are expected to come in at 20
cents-24 cents, the mid-point in line with the Zacks Consensus
Estimate of 22 cents.
Our proven model does not conclusively show that Applied
Materialswill beat earnings this quarter. That is because a stock
needs to have both a positive
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 22 cents. Hence, the difference is 0.00%.
Applied has a Zacks Rank #3 (Hold) which, 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
Other Stocks to Consider
You could consider other stocks with a positive earnings ESP
and a Zacks Rank #1, 2 or 3 such as:
Melco Crown Entertainment Limited
), with Earnings ESP of +7.50% and a Zacks Rank #1 (Strong
Ship Finance International Limited
), with Earnings ESP of +52.63% and a Zacks Rank #1.
Salix Pharmaceuticals Ltd.
), with Earnings ESP of +18.75% and a Zacks Rank #1.
APPLD MATLS INC (AMAT): Free Stock Analysis
MELCO CROWN ENT (MPEL): Free Stock Analysis
SHIP FIN INTL (SFL): Free Stock Analysis
SALIX PHARM-LTD (SLXP): Free Stock Analysis
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