Advanced Micro Devices, Inc.
) is set to report fourth-quarter 2013 results on Jan 21. Last
quarter, it posted a 100% positive surprise. Let us see how
things are shaping up for this announcement.
Growth Factors this Past Quarter
Advanced Micro's third-quarter earnings exceeded the Zacks
Consensus Estimate of 2 cents owing to solid execution and cost
control management. Revenues were up 25.8% sequentially and 15.1%
year over year. It is the highest sequential revenue growth rate
in the past five years. The solid growth was driven by a 109.7%
jump in the Graphics and Visual Solutions segment, primarily from
the ramp up of semi-custom
However, gross margins of 35.7% decreased sequentially but
were up 480 basis points (bps) from the year-ago quarter. The
sequential decrease was due to unfavorable mix and
higher-than-expected operating expenses.
For the fourth quarter, AMD expects fourth-quarter 2013
revenues to increase 5.0% (+/- 3.0%) sequentially. Non-GAAP gross
margin is expected to be 35%. Operating expenses are expected to
remain flat sequentially at approximately $450.0 million.
Our proven model does not conclusively show that AMD will beat
earnings this quarter. That is because a stock needs to have both
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
The Most Accurate estimate stands at 5 cents while the Zacks
Consensus Estimate is higher at 6 cents. That is a difference of
Zacks Rank #4 (Sell):
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
You could consider other stocks with a positive earnings ESP
and Zacks Rank #1, 2 or 3 such as:
Bally Technologies, Inc.
), with Earnings ESP of +3.13% and a Zacks Rank #1 (Strong
Western Digital Corporation
), with Earnings ESP of +0.48% and a Zacks Rank #1.
Cirrus Logic Inc.
), with Earnings ESP of +4.41% and a Zacks Rank #1.
ADV MICRO DEV (AMD): Free Stock Analysis
BALLY TECH INC (BYI): Free Stock Analysis
CIRRUS LOGIC (CRUS): Free Stock Analysis
WESTERN DIGITAL (WDC): Free Stock Analysis
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