We expect semiconductor company
) to beat expectations when it reports fourth quarter 2013
results on Jul 23.
Why a Likely Positive Surprise?
Our proven model shows that Linear is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
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 at +4.76%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #3 (Hold):
Note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The sell rated
stocks (#4 and #5) should never be considered going into an
The combination of Linear's Zacks Rank #3 (Hold) and +4.76%
ESP makes us very confident in looking for a positive earnings
beat on Jul 23.
What is Driving the Better-Than-Expected
Linear's business is well-diversified among core markets, such
as industrial, automotive and communications infrastructure. Last
quarter, the company witnessed decent improvements in revenue and
order growth, supported by the high-end products (automotive and
The improved product mix (more high-margin business) led
Linear to post solid earnings beat in the third quarter of
But the company needs to be cautious about slowing PC sales,
which affected Linear's Computing business, last quarter.
However, we believe that an expected turnaround in the
semiconductor market could provide adequate support to the
company's fundamentals in the coming quarter.
Linear has surpassed estimates in the past four trailing
quarters, which resulted in an average positive surprise of
2.48%. We believe that Linear has enough potential to beat
earnings in the upcoming quarter.
Other Stocks to Consider
Apart from Linear, we also expect earnings beat from the
), Earnings ESP of +8.33% and Zacks Rank #2 (Buy).
Huron Consulting Group Inc.
), Earnings ESP of +1.64% and Zacks Rank #2 (Buy).
), Earnings ESP of +1.96% and Zacks Rank #2 (Buy).
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INVENSENSE INC (INVN): Free Stock Analysis
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LINEAR TEC CORP (LLTC): Free Stock Analysis
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