Maxim Integrated Products, Inc.
) is set to report third-quarter fiscal 2014 results on Apr 24.
Last quarter, it posted a 10.0% negative surprise. Let's see how
things are shaping up for this announcement.
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Growth Factors This Past Quarter
Maxim posted mixed second quarter results with the bottom line
surpassing the Zacks Consensus Estimate while the top line missed
the same. The sequential revenue increase of 6.0% was primarily
due to the acquisition of Volterra. The acquisition helped the
company's Computing business to contribute 17.0% of revenues
compared with 12.0% in the prior quarter.
Of late, Maxim has increased its focus on the faster-growing
consumer and computing end markets. Maxim has focused its efforts
on mid-range smartphones because the high end of the market is
seeing growth slow down. This seems like a good strategy
considering the fact that most of the future growth is likely to
come from emerging markets.
Furthermore, Maxim has been on the lookout to expand beyond
smartphones to game consoles, tablets and e-readers. All these
efforts are aimed at extending its foothold in various new
For the third quarter, Maxim expects revenues in a range of
$590-$620 million. Backlog is expected to be $366.0 million.
While the GAAP gross margin is expected be in the 56%-58% range,
GAAP earnings are expected to be in the range of 37 cents - 41
Our proven model does not conclusively show that Maxim will beat
estimates 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 39 cents. Hence, the difference is 0.00%.
: Maxim'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:
Advanced Energy Industries, Inc.
), with Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy).
E-Commerce China Dangdang Inc.
), with Earnings ESP of +33.33% and a Zacks Rank #1.
ON Semiconductor Corp.
), with Earnings ESP of +6.67% and a Zacks Rank #1.