Markets

Qorvo (QRVO) to Report Q3 Earnings: A Beat in the Cards?

We expect Qorvo IncQRVO to beat expectations when it reports third-quarter fiscal 2017 results on Feb 1.

Why a Likely Positive Surprise?

Our proven model shows that Qorvo is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP : Qorvo's Earnings ESP is +0.94%. This is because the company's Most Accurate estimate is $1.07, while the Zacks Consensus Estimate is pegged lower at $1.06. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Qorvo currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 has a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Qorvo's Zacks Rank #3 and +0.94% ESP makes us reasonably optimistic of an earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here.

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. Price and EPS Surprise | Qorvo, Inc. Quote

What is Driving the Better-than-Expected Earnings?

Qorvo delivered mixed results in second-quarter fiscal 2017. While earnings missed the Zacks Consensus Estimate, revenues beat the same. On a year-over-year basis, both top line and bottom line registered strong growth.

We note that the company has a mixed record of earnings surprises in recent times. Qorvo has beaten the Zacks Consensus Estimate in two out of four trailing quarters with an average positive surprise of 6.11%.

Qorvo expects non-GAAP revenues in third-quarter fiscal 2017 to be approximately $800-$840 million. At mid-point, the figure reflects a healthy 32.1% year-over-year growth. The company also anticipates gross margin to expand 100-200 basis points. Further, earnings are expected to be in the range of $1.15 to $1.35 per share. Management expects operating expenses to remain near 20% of sales in the third quarter.

Qorvo's ability to meet the growing requirements of customers through the introduction of innovative products is likely to augur well for the company's results in the to-be reported quarter. Higher research & development costs in order to continuously develop new products can impact profitability in the near term.

We note that Qorvo's shares (up 59.3%) have outperformed the Zacks Semiconductors- Radio Frequency industry (up 49.7%) in the last one year.

Other Stocks to Consider

Here are some companies you may consider as our proven model shows they too have the right combination of elements to post an earnings beat this quarter:

Applied Optoelectronics AAOI with an Earnings ESP of +15.87% and a Zacks Rank #1.

Oclaro OCLR with an Earnings ESP of +10.53% and a Zacks Rank #2.

Pure Storage PSTG with an Earnings ESP of +4.17% and a Zacks Rank #2.

Zacks' Top Investment Ideas for Long-Term Profit

How would you like to see our best recommendations to help you find today's most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Qorvo, Inc. (QRVO): Free Stock Analysis Report

Applied Optoelectronics, Inc. (AAOI): Free Stock Analysis Report

Oclaro, Inc. (OCLR): Free Stock Analysis Report

Pure Storage, Inc. (PSTG): Free Stock Analysis Report

To read this article on Zacks.com click here.

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.

In This Story

AAOI PSTG QRVO

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More