We expect semiconductor company
) to beat expectations when it reports third quarter 2013 results
on Jul 25.
Why a Likely Positive Surprise?
Our proven model shows that KLA is likely to beat earnings
estimates because it has the right combination of two key
Positive Zacks ESP
: The expected surprise prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +2.53%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #2 (Buy):
Note that stocks with a Zacks Rank #1, #2 and #3 have a
significantly higher chance of beating earnings estimates. The
sell-rated stocks (Zacks Rank #4 and #5) should never be
considered going into an earnings announcement.
The combination of KLA's Zacks Rank #2 (Buy) and an ESP +2.53%
makes us reasonably confident in looking for a positive earnings
beat on Jul 25.
What is Driving the Better than Expected Earnings?
KLA's new products, process node transition and strong demand
for smartphones and mobile computing devices will likely drive
capex spending and growth in the second half of the year.
Also, according to a recent report from Gartner, worldwide
wafer fab equipment (WFE) spending will return to growth in 2013
with WFE spending projected to surpass $35.4 billion, a 7.4%
increase from $33 billion in 2012. This is a big positive for the
The positive trend is seen in the trailing four-quarter
average surprise of 9.84%.
Other Stocks to Consider
KLAis not the only firm looking up this earnings season. We
also see likely earnings beats coming from these companies:
INVENSENSE INC (INVN): Free Stock Analysis
KLA-TENCOR CORP (KLAC): Free Stock Analysis
SCIENTIFIC GAME (SGMS): Free Stock Analysis
SYNTEL INC (SYNT): Free Stock Analysis Report
To read this article on Zacks.com click here.
), with an ESP of +0.82% and a Zacks Rank #1 (Strong Buy)
), Earnings ESP of +8.33% and a Zacks Rank #2 (Buy)
Scientific Games Corp.
), with an ESP of +100.0% and a Zacks Rank #3 (Hold)