Microchip Technology, Inc
) is scheduled to report first-quarter fiscal 2015 results after
the closing bell on Jul 31. In the last reported quarter,
Microchip's earnings comfortably beat the Zacks Consensus Estimate
by 9 cents. Let's see how things are shaping up for this
Factors to Consider
High quality standards, solid performance, reliability features,
competitive pricing and diversity of products make Microchip one of
the better-positioned companies in the industry. Microchip recently
inked an agreement to acquire ISSC Technologies Corporation, a low
power Bluetooth and advanced wireless solutions provider for the
Internet of Things to supplement its presence in these niche
The strategic purchase complements Microchip's initiatives in
the wireless market, by leveraging ISSC's deep domain knowledge in
Bluetooth and wireless technologies to enable significant
However, Microchip derives a significant proportion of its revenues
from outside America, subjecting it to exchange rate volatility.
Any unfavorable movement in exchange rates continue to adversely
impact the top line of the company. Also, lead times (the period of
time between the initiation of any process of production and the
completion of that process) continue to increase due to
manufacturing constraints. This is likely to impact the
profitability of the company to some extent.
Our proven model does not conclusively show that Microchip will
beat the Zacks Consensus Estimate this quarter. This is because a
stock needs to have both a positive
and a Zacks Rank #1, #2 or #3 for this to happen. This is not the
case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is pegged at 0.00%. This is because both the Most
Accurate estimate and Zacks Consensus Estimate currently stand at
Zacks Rank #3 (Hold): Microchip's Zacks Rank #3 (Hold) when
combined with 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.
Other Stocks to Consider
Here are some companies you may want to consider as our model
shows that they have the right combination of elements to post an
earnings beat in the future.
Arch Capital Group Ltd. (
) earnings ESP of +5.10% and Zacks Rank #2 (Buy).
) earnings ESP of +1.90% and Zacks Rank #2 (Buy).
Clayton Williams Energy, Inc. (
), earnings ESP of +0.67% and Zacks Rank #1. (Strong Buy).
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