Linear Technology Corporation
) is set to report third-quarter fiscal 2014 results on Apr 15.
Last quarter, it posted a 4.6% positive surprise. Let's see how
things are shaping up for this announcement.
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Growth Factors This Past Quarter
Linear posted mixed second quarter results with the bottom line
surpassing the Zacks Consensus Estimate while the top line
missed. The sequential revenue decline of 1.7% was attributable
to weak sales in the industrial market. However, the book-to-bill
ratio was slightly positive in the quarter.
While Linear's business is well-diversified among core markets,
such as industrial, automotive and communications infrastructure,
its computing business has been hit by weakness in the PC and
Management expects improved bookings momentum in automotive and
industrial markets in the near term, indicating stronger revenues
in the upcoming quarter.
However, uncertainty in its core industrial, communications
infrastructure and automotive businesses coupled with competition
from companies like
Texas Instruments Inc.
) remain an overhang.
Our proven model does not conclusively show that Linear
Technology will beat estimates this quarter. That is because a
stock needs to have both a positive Earnings ESP 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 46 cents. Hence, the difference is 0.00%.
: Linear Technology's Zacks Rank #3 (Hold), when combined with a
0.00% ESP makes surprise prediction difficult.
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 want to consider as
our model shows that they have the right combination of elements
to post an earnings beat this quarter:
E-Commerce China Dangdang Inc.
), with Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy).
ON Semiconductor Corp.
), with Earnings ESP of +6.67% and a Zacks Rank #1.