Cirrus Logic (CRUS) to Report Q3 Earnings: What's in Store?

Cirrus Logic Inc.CRUS is set to report third-quarter fiscal 2017 results on Feb 1. Last quarter, the company recorded a positive earnings surprise of 30.5%. Let's see how things are shaping up for this quarter.

Factors to Consider

Cirrus Logic is a premier supplier of high-performance analog circuits and advanced mixed-signal chip solutions. The company posted better-than-expected second-quarter fiscal 2017 results. The year-over-year comparisons on both the counts were also favorable.

Notably, as per revenue segments, Portable audio product revenues accounted for approximately 89% of the total revenue last quarter. Also, Cirrus Logic generates a significant portion of its revenues from Apple Inc. AAPL . This means that there is always a risk of losing an Apple design contract, which will significantly hurt the company's financials.

We remain cautious about the company as the current global economic downturn might have an impact on its performance in the soon-to-be reported quarter. Moreover, the company faces competition from the likes of Texas Instruments Inc. and STMicroelectronics, which remains a headwind.

Nonetheless, continued investments in the audio segment are expected to have a positive impact in the long run. Additionally, synergies from acquisitions and expansion in the LED market continue to drive growth.

Cirrus Logic, Inc. Price and EPS Surprise

Cirrus Logic, Inc. Price and EPS Surprise | Cirrus Logic, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Cirrus Logic will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for Cirrus Logicis 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.53 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Cirrus Logic has a Zacks Rank #3, which when combined with an ESP of 0.00%, makes surprise prediction difficult.

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

Stocks to Consider

Here are a couple of companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

CVS Health Corporation CVS , with an Earnings ESP of +0.60% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here.

Moody's Corporation MCO , with an Earnings ESP of +0.89% and a Zacks Rank #3

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Moody's Corporation (MCO): Free Stock Analysis Report

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Cirrus Logic, Inc. (CRUS): Free Stock Analysis Report

CVS Health Corporation (CVS): 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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