Cirrus Logic Inc.
) is set to report first-quarter fiscal 2015 results on Jul 23.
Last quarter, the company posted a positive earnings surprise of
33.3%. Moreover, it is worth noting that Cirrus Logic has
outperformed the Zacks Consensus Estimate in all the four preceding
quarters with an average positive surprise of 28.5%.
Let us see how things are shaping up for this announcement.
Growth Factors this Past Quarter
We believe that the continued investments in the audio segment are
expected to positively impact the company in the long run.
Additionally, synergies from acquisitions and expansion in the LED
market continue to drive growth.
Most recently, Cirrus Logic agreed to buy Wolfson Microelectronics
plc for nearly $467.0 million. This acquisition provides Cirrus
Logic the platform to build its audio signal processing components.
We believe that the acquisition will help Cirrus Logic to serve a
broad customer base in the mass storage, industrial and audio
It is noteworthy that, Cirrus Logic is poised to benefit from
) recent agreements with
) (the largest carrier in China), since Apple is its major
customer. Cirrus Logic generates approximately 80.0% of its revenue
from Apple. So there's a good chance that Cirrus Logic will benefit
similarly. Nonetheless, there is always a risk of losing an Apple
design, which can impact the financial performance of the company.
Moreover, we remain cautious about the company as the current
global economic downturn might affect its business potential, going
forward. Also, the company faces competition from the likes of
Texas Instruments Inc. and STMicroelectronics, which remains a
Our proven model does not conclusively show that Cirrus Logic will
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 17 cents. Hence, the difference is 0.00%.
Cirrus Logic carries a 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
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:
Western Digital Corp,
) has an Earnings ESP of +4.02% and holds a Zacks Rank #2 (Buy).
F5 Networks, Inc.
) has an Earnings ESP of +3.81% and a Zacks Rank #2.
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