Will Applied Materials (AMAT) Beat Earnings? - Analyst Blog

By Zacks Equity Research,

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Applied Materials, Inc. ( AMAT ) is set to report fourth-quarter 2013 results on Nov 14. Last quarter, it posted a 5.3% negative surprise. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company's third-quarter earnings missed the Zacks Consensus Estimate by 4 cents due to lower volumes. Revenues were also disappointing, missing the estimate by 4.2% due to seasonal softness in Silicon Systems Group and Energy and Environmental Solutions, partially offset by increased demand in the Display segment.

The second quarter was weak for Applied in terms of margin growth. This was mainly due to unfavorable mix in the SSG segment that was partially offset by lower variable expenses and inventory charges.

The company provided cautious fourth-quarter guidance, with revenues expected to flat with the third quarter (slightly softer than seasonal, especially considering management's statement that there was risk to the downside).

Earnings Whispers?

Our proven model does not conclusively show that Applied Materials will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP:   Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 18 cents. Hence, the difference is 0.00%.

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 a Zacks Rank #1, 2 or 3 such as:

Best Buy Co., Inc. ( BBY ), with Earnings ESP of +18.18% and a Zacks Rank #1 (Strong Buy).

Dish Network Corp. ( DISH ), with Earnings ESP of +4.76% and a Zacks Rank #2 (Buy).

Hilltop Holdings Inc. ( HTH ), with Earnings ESP of +3.23% and a Zacks Rank #2(Buy).

APPLD MATLS INC (AMAT): Free Stock Analysis Report

BEST BUY (BBY): Free Stock Analysis Report

DISH NETWORK CP (DISH): Free Stock Analysis Report

HILLTOP HLDGS (HTH): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: AMAT , BBY , DISH , HTH

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