) is set to report third-quarter fiscal 2014 results on Jul 24.
Last quarter, it posted a 4.9% negative surprise. Let's see how
things are shaping up for this announcement.
Growth Factors This Past Quarter
Microsemi posted mixed second quarter results with the top line
surpassing the Zacks Consensus Estimate while the bottom line
missed the same. The sequential increase of 12.3% in revenues was
attributable to strong performance across all its end markets.
Book-to-bill ratio was greater than 1, driven by orders for longer
lead time products.
Moreover, favorable product mix and strong industry fundamentals
are expected to benefit the Aerospace end market. Additionally, the
ramp up of more electronic aircraft such as Boeing 787, Airbus A350
and A380 will lead to significant content growth.
In addition, ramp up of new chip scale atomic clocks, which help in
energy exploration applications and other new programs, will help
its industrial market generate stronger revenues in the near term.
However Microsemi's second-quarter earnings missed the Zacks
Consensus Estimate due to higher-than-expected operating expenses.
For the third quarter, Microsemi expects revenues to be in the
range of $287-$293 million, up 1.0% sequentially at the mid-point.
Non-GAAP gross margins are expected to increase in the range of
20-100 bps and earnings per share are expected to be within 55-61
Our proven model does not conclusively show that Microsemi 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.
Negative Zacks ESP
: The Most Accurate estimate stands at 46 cents while the Zacks
Consensus Estimate is higher at 47 cents. That is a difference of
: Microsemi's Zacks Rank #3 (Hold) when combined with a negative
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:
Charter Communications, Inc.
), with Earnings ESP of +387.50% and a Zacks Rank #1 (Strong
First Solar, Inc.
) has an Earnings ESP of +6.06% and a Zacks Rank #1
Silicon Motion Technology Corp.
), with Earnings ESP of +33.33% and a Zacks Rank #1
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CHARTER COMM-A (CHTR): Free Stock Analysis
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SILICON MOTION (SIMO): Free Stock Analysis
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