Markets

Seagate (STX) Q4 Earnings: Disappointment in the Cards?

Seagate Technology PlcSTX is scheduled to release fourth-quarter fiscal 2017 results on Jul 25.

The company is unlikely to post a positive earnings surprise due to an unfavorable combination of Zacks Rank #4 (Sell) and Earnings ESP of -2.02%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

This is because, 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 estimates.

We also don't recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Increasing Competition Hurts Growth

Year to date, Seagate has underperformed the S&P 500 Index. The stock has returned 3.3% as compared with the Index's gain of 10.7%.

The dismal performance can be attributed to intensifying competition in the market post the merger of Western Digital WDC and SanDisk. Western Digital recently revised fourth-quarter estimates upwards driven by better-than-expected demand for its storage products (flash-based storage devices). This also doesn't bode well for Seagate's to-be-reported quarter results.

Moreover, shift in demand from PCs to inexpensive mobile devices is hurting growth of Seagate, which is primarily a hard disk drive (HDD) manufacturer.

Further, declining demand in the PC market as evident from Gartner and IDC's recently released worldwide PC shipments data is a major concern for Seagate.

Seagate Technology PLC Price and EPS Surprise

Seagate Technology PLC Price and EPS Surprise | Seagate Technology PLC Quote

Additionally, we also believe that Seagate's significant investments in HAMR technology, 10 and 12 terabyte Helium HDD and fourth generation SMR technology will take some more time to translate into credible top-line growth.

Stocks to Consider

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

Cypress Semiconductor CY with an Earnings ESP of +11.11% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Lam Research LRCX with an Earnings ESP of +1.31% and a Zacks Rank #1.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

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

Western Digital Corporation (WDC): Free Stock Analysis Report

Seagate Technology PLC (STX): Free Stock Analysis Report

Cypress Semiconductor Corporation (CY): Free Stock Analysis Report

Lam Research Corporation (LRCX): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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

LRCX WDC STX

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