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What Lies in Store for InvenSense (INVN) in Q2 Earnings?

InvenSense, Inc.INVN , a leading provider of motion tracking devices, is slated to report second-quarter fiscal 2017 results on Nov 3. Last quarter, the company posted a negative earnings surprise of 15.38%.

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

Factors to Consider

InvenSense reported a weak fiscal first quarter. Also, management issued a weak fiscal second-quarter guidance, which indicates poor demand in consumer and mobile markets.

For the fiscal second quarter, InvenSense expects total revenue in the range of $77-$83 million, representing a sequential decrease of 32% at the midpoint. On a non-GAAP basis, gross margin is likely to be 45.5%-46.5%.

Non-GAAP income per share is projected in the range of 2 cents to 4 cents, while GAAP loss per share is expected in the range of 9 cents to 13 cents.

We believe that the company's growth initiatives including increased software content, market diversification and new sensors built are the positives.

Additionally, with technological advancements, demand for Internet of Things (IoT) devices, console and portable video gaming devices, digital still and video cameras, wearables, head mounted displays and navigation devices is growing. InvenSense's chips target all these product categories and hence should experience demand growth, in our opinion.

Increasing competition and uncertain demand patterns remain headwinds.

INVENSENSE INC Price and EPS Surprise

INVENSENSE INC Price and EPS Surprise | INVENSENSE INC Quote

Earnings Whispers

Our proven model does not conclusively show that InvenSense will beat estimates this quarter. This 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 a loss of 5 cents. Hence, the difference is 0.00%.

Zacks Rank: InvenSense's 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 That Warrant a Look

Here are some stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:

SITO Mobile, Ltd. SITO , with an Earnings ESP of +100.00% and Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Stratasys Ltd. SSYS , with an Earnings ESP of +41.67% and Zacks Rank #1.

CenturyLink, Inc. CTL , with an Earnings ESP of +1.82% and a Zacks Rank #3.

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STRATASYS LTD (SSYS): Free Stock Analysis Report

CENTURYLINK INC (CTL): Free Stock Analysis Report

SITO MOBILE LTD (SITO): Free Stock Analysis Report

INVENSENSE INC (INVN): 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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