OmniVision Technologies, Inc. ( OVTI ) is set to report fiscal first-quarter 2015 results on Aug 28. Last quarter, it posted a 3.7% negative surprise. Let's see how things are shaping up for this announcement.
Growth Factors this Past Quarter
OmniVision reported strong fourth-quarter results with both the top and bottom lines exceeding the Zacks Consensus Estimate. The mobile phone market was the main contributor and constituted 69% of total revenue.
The increase in mobile sales was due to significant growth in the Asian business, particularly smartphone original equipment manufacturers (OEMs) in China and Taiwan. OmniVision has consistently been solidifying its position in the handset market and expanded into other areas by leveraging its advanced technology.
However, its entertainment end market and notebook and webcam segment revenues were lower as compared to the previous quarter.
Given, Ominivison's product roadmap, growth prospects, cost structure improvement, market diversification and management execution, it will be able to deal with the short product life cycles and temporary slowdown in the notebook and entertainment end markets.
Moreover, its pixel technology and camera-cube chip technology for low-resolution cameras and growth of its camera sensors at major automobile OEMs will further boost its revenues.
For the first quarter, OmniVision expects revenues in the range of $360.0-$400.0 million. GAAP earnings per share are expected in the range of 29-49 cents while non-GAAP earnings, excluding share-based compensation and the associated tax impact, are likely to be in the range of 43-63 cents per share.
Our proven model does not conclusively show that OmniVision will beat earnings 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.
Zacks ESP : Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 37 cents. Therefore, the ESP for the stock is 0.00%.
Zacks Rank : OmniVision holds a Zacks Rank #3 (Hold) which 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
You can consider other stocks with a positive Earnings ESP and Zacks Rank #1, 2 or 3 such as:
Sanderson Farms, Inc. ( SAFM ), with Earnings ESP of +4.92% and a Zacks Rank #1 (Strong Buy)
Abercrombie & Fitch Co. ( ANF ), with Earnings ESP of +10.00% and a Zacks Rank #2 (Buy)
Aruba Networks, Inc. ( ARUN ), with Earnings ESP of +16.67% and a Zacks Rank #2
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