) is set to report second quarter fiscal 2013 results on Jan 24.
Last quarter, it posted a negative earnings surprise of 3.45%.
Let's see how things are shaping up for this announcement.
Factors to Consider this Past Quarter
Just like other technology companies, KLA has also been
affected by the slump in the PC market due to a sluggish economy.
The slowing end markets and caution at customers led to weak
sales growth rates at KLA in the first quarter of 2013. Customers
made the most of the existing inventory and maintained low
utilization rates. Weaker volumes also impacted margins in the
Orders declined across all customers, with foundries being the
worst impacted. With the improvement in 28nm yields, the demand
for process control equipment has declined, thus impacting
According to a recent report from Gartner, worldwide wafer fab
equipment (WFE) spending is forecasted to total $27 billion in
2013, a 9.7% decline from 2012 due to overall market weakness. We
believe that significant growth in KLA's business is not likely
until semiconductor demand gains momentum.
Our proven model does not conclusively show that KLA-Tencor is
likely to beat earnings estimates this quarter. That is because a
stock needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
)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 57 cents. Hence, the difference is 0.00%.
Zacks Rank #3 (Hold):
KLA-Tencor's Zacks Rank #3 (Hold) lowers the predictive power of
ESP because the Zacks Rank #3 when combined with a ESP of 0.00%
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 you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
), with Earnings ESP of +14.82% and Zacks Rank #1 (Strong
), with Earnings ESP of +3.64% and Zacks Rank #2 (Buy)
) with Earnings ESP of +20.69% and Zacks Rank #3 (Hold)
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