KLA-Tencor (KLAC) to Post Q1 Earnings: What's in the Cards?

KLA-Tencor Corporation KLAC is set to report first-quarter fiscal 2020 results on Oct 30. It delivered a positive earnings surprise of 4.09% in the last reported quarter.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with average of 9.31%.

Performance in the Last Reported Quarter

KLA-Tencor had reported fiscal fourth-quarter 2019 non-GAAP earnings of $1.78 per share, which surpassed the Zacks Consensus Estimate by 7 cents but decreased 19.8% from the year-ago period.

Revenues of $1.26 billion outpaced the Zacks Consensus Estimate of $1.25 billion and improved 17.6% on a year-over-year basis.

KLA-Tencor Corporation Price and EPS Surprise

KLA-Tencor Corporation price-eps-surprise | KLA-Tencor Corporation Quote

Fiscal Q1 Forecasts

For the fiscal first quarter, the company expects revenues in the range of $1.31-$1.39 billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.35 billion, indicating growth of 23.6% from the year-ago quarter.

Non-GAAP earnings are expected in the range of $2.04-$2.34 per share. The Zacks Consensus Estimate for earnings is currently pegged at $2.20, indicating a decline of 10.6% from the year-ago quarter.

KLA-Tencor expects memory to be approximately 42% of shipments in the fiscal first quarter. Foundry is expected to constitute around 44% of total shipments and Logic is anticipated to remain flat with the year-ago quarter.

Factors to Consider

KLA-Tencor’s robust product portfolio has been catering to increasing demand for wafer products. Also, the company’s efforts in bringing EUV lithography technology to the market have been gaining momentum.

These efforts, along with the expanding value of inspection and measurement in addressing critical customer problems, and semiconductor industry expansion in China are expected to have driven KLA-Tencor’s performance in the to-be-reported quarter.

Foundry and logic performed well in the fiscal fourth quarter, a trend that most likely continued in the fiscal first quarter as well, driven by next-generation technology development, capacity additions at leading-edge nodes, increasing competitive dynamics and investment in EUV infrastructure.

However, weakness in the memory segment might reflect on the company’s sales figures. Management also expects WFE to be down in 2019, largely due to weaker DRAM demand.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for KLA-Tencor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, KLA-Tencor has a Zacks Rank #2.

Stocks That Warrant a Look

Here are a few stocks worth considering, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

TE Connectivity Ltd. TEL has an Earnings ESP of +1.15% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices, Inc. AMD has an Earnings ESP of +6.54% and a Zacks Rank of #2.

Apple Inc. AAPL has an Earnings ESP of +0.04% and a Zacks Rank #3.

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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.