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Can Applied Materials (AMAT) Surprise Earnings this Season? - Analyst Blog

Applied Materials, Inc. ( AMAT ) is set to report third-quarter 2014 results on Aug 14. Last quarter, the company posted in-line results. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The company's second-quarter earnings were in line with the Zacks Consensus Estimate. Revenues of $2.35 billion were up 7.4% sequentially and 19.3% year over year, benefiting from the proliferation of mobile devices.

The first quarter was strong for Applied Materials in terms of margin growth, driven by improving mix of higher-value products in semiconductor and display as well as material cost efficiencies

For the third quarter, Applied Materials expects revenues to be flat to down 5% sequentially with non-GAAP earnings per share coming within 25-29 cents.

Earnings Whispers?

Our proven model does not conclusively show that Applied Materials 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 27 cents. Hence, the difference is 0.00%.

Zacks Rank: Appliedhas a Zacks Rank #4 (Sell) which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

Other Stocks to Consider

You could consider other stocks with a positive Earnings ESP and a favorable Zacks Rank such as:

Myriad Genetics Inc. ( MYGN ), with an Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).

Medtronic, Inc. ( MDT ), with an Earnings ESP of +1.09% and a Zacks Rank #2 (Buy).

Callon Petroleum Company ( CPE ), with an Earnings ESP of +5.56% and a Zacks Rank #2.

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MYRIAD GENETICS (MYGN): Free Stock Analysis Report

APPLD MATLS INC (AMAT): Free Stock Analysis Report

CALLON PETE-DEL (CPE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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