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Synaptics' Q1 Earnings Around the Corner: What to Expect?

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Synaptics Inc.SYNA is set to report first-quarter fiscal 2016 results on Oct 22. Last quarter, the company posted a negative earnings surprise of 9.22%. The company has posted an average positive earnings surprise of 10.72% over the trailing four quarters.

Let's see how things are shaping up for this quarter.

Factors to Consider

Last quarter, the company reported soft results with both earnings and revenues missing the estimates. The business was impacted by weakness in the demand for display drivers. This has resulted in soft revenue guidance for the first quarter

Nonetheless, Synaptics holds a strong position in the touch-based interface market, which should boost earnings. Further, the company has been focused on developing innovative solutions, which when coupled with its unique business model place it well in the market. Synaptics also remains a beneficiary of the ongoing boom in the mobile market. This apart, last year, the company made strategic acquisitions like Renesas SP Drivers, which have greatly expanded its offerings.

Recently, the company unveiled its pressure sensitive touchscreen controllers. These new controllers have functionalities similar to Apple's AAPL 3D Touch feature in iPhone 6s. Therefore, the company seems well positioned to reap the benefits of demand for the same among Android users.

However, of late, the company has been facing increasing competition from the likes of Cypress Semiconductor Corp. CY . Also, the ongoing uncertainty in the Chinese economy can also prove to be a headwind for the company as it derives a significant portion of revenues from the region.

Earnings Whispers

Our proven model does not conclusively show that Synaptics is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP : Synaptics currently has an ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.20 per share.

Zacks Rank : Synaptics has a Zacks Rank #4 (Sell).We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stock to Consider

Here's a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:

Fiserv, Inc. FISV with Earnings ESP of + 3.09% and a Zacks Rank #2 (Buy).

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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

SYNAPTICS INC (SYNA): Free Stock Analysis Report

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CYPRESS SEMICON (CY): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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