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

KLA-Tencor Corporation KLAC is set to report first-quarter fiscal 2021 results on Oct 28. It delivered an earnings surprise of 16.2% in the last reported quarter.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 9.6%.

Fiscal First-Quarter Forecasts

For the fiscal first quarter, KLA-Tencor expects revenues in the range of $1.405-$1.555 billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.48 billion, indicating growth of 4.8% from the year-ago quarter.

Non-GAAP earnings are expected in the range of $2.42-$3.06 per share. The Zacks Consensus Estimate for earnings is currently pegged at $2.75 per share, indicating an increase of 10.9% from the year-ago quarter.

KLA Corporation Price and EPS Surprise

KLA Corporation Price and EPS Surprise

KLA Corporation price-eps-surprise | KLA Corporation Quote

Performance in the Last Reported Quarter

KLA-Tencor reported fiscal fourth-quarter 2020 non-GAAP earnings of $2.73 per share, which beat the Zacks Consensus Estimate of $2.35.

Revenues increased 16% from the year-ago quarter and 2.5% sequentially to $1.46 billion, surpassing the Zacks Consensus Estimate by 4.04%.

Factors to Note

KLA-Tencor’s robust product portfolio has been catering to increasing demand for wafer products. Also, it has been seeing strong demand in Semiconductor Process Control systems.

The company is expected to have witnessed increased Semiconductor device demand for enterprise and cloud applications due to work-from-home surge and a strengthening gaming market.

In addition, its Gen5 optical inspection platform has been gaining momentum. Increased deployment of Gen5 for both technology development and production monitoring at the advanced nodes by customers is expected to have positively impacted top-line growth in the quarter. Increasing demand for mask inspection should have helped it contribute to revenue growth in the to-be-reported quarter.

The company’s efforts in bringing the 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, are expected to have driven KLA-Tencor’s performance in the to-be-reported quarter.

Foundry and logic performed well in fiscal fourth-quarter 2020, 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.

Earnings Whispers

Our proven model does not 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 #4 (Sell).

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.

Alphabet GOOGL has an Earnings ESP of +7.40% and a Zacks Rank of 2.

TE Connectivity Ltd. TEL has an Earnings ESP of +5.40% and a Zacks Rank #2.

Netflix, Inc. NFLX has an Earnings ESP of +11.35% and holds a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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