Rambus Inc.RMBS is set to report third-quarter 2015 results on Oct 19. Last quarter, the company posted in-line earnings. Moreover, it is worth noting that Rambus has outperformed the Zacks Consensus Estimate in three out of the four preceding quarters with an average positive earnings surprise of 72.86%.
Let us see how things are shaping up for this announcement.
Factors this Past Quarter
Rambus designs, develops, licenses and markets high-speed chip-to-chip interface technology to enhance the performance and cost-effectiveness of computers, consumer electronics and other electronic systems.
With energy-efficient lighting, LED products being used in the latest architectural, retail, commercial and residential lighting fixtures, we believe Rambus is in a favorable position to capitalize on this opportunity.
Rambus is going through a restructuring phase and we expect it to yield favorable results in the coming quarters. Additionally, licensing agreements - the result of successful monetization of Rambus' patents - remains a recurring revenue source and should boost third-quarter results.
However, the company's investments in the CryptoManager platform and certain memory and interface technologies may impact margins in the to-be-reported quarter. Other companies in the same space are Semiconductor Manufacturing International Corp. and Advanced Micro Devices AMD .
Our proven model does not conclusively show that Rambus will beat earnings this quarter. That 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: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 12 cents. Hence, the difference is 0.00%.
Zacks Rank: Rambus' Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Boyd Gaming Corp. BYD , with an Earnings ESP of +20.00% and a Zacks Rank #1.
Fiserv Inc. FISV , with an Earnings ESP of +3.09% and a Zacks Rank #2.
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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.