) is set to release fourth-quarter 2014 results on Feb 12. In the
previous quarter, NVIDIA's earnings per share matched the Zacks
Consensus Estimate. Let's see how things are shaping up for this
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Factors to Consider this Past Quarter
Although NVIDIA reported in line results in the third quarter,
year over year comparisons were dismal. NVIDIA reported a
year-over-year decline in earnings primarily due to lower sales
and higher-than-expected operating costs. Also, the
year-over-year sales decline in both Tegra and GPU segments
During the quarter, NVIDIA launched the 192-core Tegra K1 mobile
processor, powered by Keplar technology, which provides an
enhanced gaming experience for users. With the launch of this
CUDA-core Tegra K1, NVIDIA can maximize user experience by
offering high performance computing (HPC) capabilities, which in
turn will increase its customer base and help in garnering
We believe NVIDIA's innovative product pipeline that consists of
the recently introduced SHIELD and the upcoming mobile processor
Logan Tegra 4 processors will boost top-line growth, going
However, the continuous decline in PC sales is a cause of concern
for the company's GPU segment. Competition from the likes of
) and higher operating expenses are also expected to hurt
profitability in the near term.
Our proven model does not conclusively show that NVIDIA is likely
to beat earnings estimates this quarter. This is because a stock
needs to have both a positive Earnings ESP (Expected Surprise
Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This
is not the case here as you will see below.
ESP for NVIDIA is 0.00%. This is because the Most Accurate
estimate and the Zacks Consensus Estimate both stand at 18 cents.
NVIDIA'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:
), Earnings ESP of +20.0% and a Zacks Rank #1 (Strong Buy)