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Electronic Stocks' Q3 Earnings on Oct 26: GRMN, ARW & More

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The third quarter earnings season is gathering momentum with results from 116 S&P 500 members or almost 30% of the index's total market capitalization already out (as of Oct 21).

As per the latest Zacks Earnings Trend report, total earnings of these 116 index members are up 3.3% year over year on the back of 1.8% higher revenues. Beat ratios are impressive with 80.2% beating earnings estimates and 62.9% coming ahead of revenue expectations.

More than 800 companies are set to report results this week, including 171 S&P 500 members. Notably, after consecutive five quarters of decline, earnings are now anticipated to record growth.

Overall third-quarter earnings for S&P 500 companies are now expected to inch up 0.1% (compared with the earlier estimate of down 1%) from the year-ago quarter on revenues that are estimated to increase 1.5%.

Growth is expected to be driven by impressive results from the Finance sector, which is anticipated to mitigate sluggish growth from the Energy, Autos and Transportation sectors.

As far as the technology sector is concerned, we now have third-quarter results from 33.3% of the sector's total market capitalization in the S&P 500 index. So far, total earnings are up 5% year over year on 0.2% lower revenues, with 88.2% beating earnings estimates and 70.6% beating revenue expectations.

Earnings for the Technology sector are now anticipated to be up 1.1% based on 1% lower revenues. Apple's earnings are expected to decline 19.8% on 9.1% lower revenues, which will deal a major blow to the sector's overall earnings. Excluding Apple, earnings are estimated to grow 6.4%.

Let's take a look at four electronics stocks - Garmin Ltd. GRMN , Arrow Electronics, Inc. ARW , Generac Holdings Inc. GNRC and AVX Corp. AVX , which are scheduled to release quarterly numbers on Oct 26.

Garmin, a leading OEM of GPS-based and other electronic devices, is unlikely to beat third-quarter 2016 earnings estimates as it has a Zacks Rank #3 (Hold) and an Earnings ESP of -3.77%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

GARMIN LTD Price and EPS Surprise

GARMIN LTD Price and EPS Surprise | GARMIN LTD Quote

This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat earnings. Conversely, 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.

However, we note that Garmin has been performing well in each and every segment. In the second quarter, the company realized positive contribution from the DeLorme acquisition. DeLorme is helping to add device and recurring service revenues to the outdoor segment.

Garmin also started shipments of vivoactive HR and vivofit 3 activity trackers, Forerunner 735XT multi-sport-capable running watch and vivosmart HR + smart activity tracker with GPS.

The company focuses on continued innovation to deliver compelling products across served markets. However, macroeconomic challenges remain a part of the operating environment. (Read More: Garmin Q3 Earnings: What's in the Cards this Time ?)

Notably, Garmin's results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an impressive average beat of 24.83%.

Similarly, we don't expect Arrow Electronics, the world's largest distributor of electronic components and computer products to industrial and commercial customers, to post an earnings beat in third-quarter 2016 as it has a Zacks Rank #3 and an Earnings ESP of 0.00%.

ARROW ELECTRONI Price and EPS Surprise

ARROW ELECTRONI Price and EPS Surprise | ARROW ELECTRONI Quote

Though the company posted a 0.60% negative earnings surprise in the last quarter, it has an average four-quarter beat of 0.84%.

However, Generac Holdings could come up with a positive surprise this quarter as it has a favorable combination of a Zacks Rank #3 and an Earnings ESP of +5.26%.

GENERAC HOLDING Price and EPS Surprise

GENERAC HOLDING Price and EPS Surprise | GENERAC HOLDING Quote

We also note that Generac Holdings' results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 10.45%. In the last quarter, this manufacturer of backup power generation products for residential, light commercial and industrial markets posted an 8.47% positive earnings surprise.

AVX, a leading worldwide manufacturer and supplier of passive electronic components and related products, however, is unlikely to beat third-quarter 2016 earnings estimates as it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here

AVX CORP Price and EPS Surprise

AVX CORP Price and EPS Surprise | AVX CORP Quote

We also note that AVX results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 1.69%. In the last quarter, its earnings matched the consensus mark.

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AVX CORP (AVX): Free Stock Analysis Report

GARMIN LTD (GRMN): Free Stock Analysis Report

ARROW ELECTRONI (ARW): Free Stock Analysis Report

GENERAC HOLDING (GNRC): 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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