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What's in Store for Maxim Integrated (MXIM) in Q1 Earnings?

Maxim Integrated Products, Inc.MXIM is set to report first quarter fiscal 2016 results on Oct 22. Last quarter, it posted a 14.29% positive surprise. Let's see how things are shaping up for this announcement.

Factors to Consider

Maxim delivered mixed fiscal fourth quarter 2015 results with earnings beating the Zacks Consensus Estimate but revenues missing the same. Higher earnings were primarily attributable to a stronger automotive business, lower operating expenses and a slightly lower tax rate.

Revenues were up 0.9% sequentially but down 9.3% year over year. The sequential increase primarily resulted from strong demand for automotive products.However, smartphone revenues were lower than the company's expectations due to broad based weakness in the communications market. Industrial was slightly better than the company's expectations

Of late, Maxim has been developing technology based on advanced process nodes in collaboration with its foundry partners. New products from this initiative could help it expand margins.

It is also taking steps to restructure operations by discontinuation of investment in its MEMS and touch lines of business. The company's steps to streamline costs will help it increase its profitability and therefore drive margins. Also, it is undertaking multiple initiatives to increase margins going forward. The company is especially focusing on manufacturing and R&D.

For the first quarter of fiscal 2016, Maxim expects revenues in the range of $545 million to $585 million based on a quarter-end backlog of $366.0 million.Earnings per share are expected within 22-28 cents on a GAAP basis and 38-44 cents on an adjusted basis.

Earnings Whispers?

Our proven model does not conclusively show that Maxim will beat estimates 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. 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 41 cents. Therefore, the Earnings ESP for the stock is 0.00%.

Zacks Rank: Maxim's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

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.

Stocks to Consider

You can consider the following stocks, which have a favorable combination of a positive Earnings ESP and a favorable Zacks Rank:

Pandora Media, Inc. P with an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy)

Agilent Technologies Inc. A with an Earnings ESP of +2.13% and a Zacks Rank #2 (Buy)

T-Mobile US, Inc. TMUS with an Earnings ESP of +3.13% and a Zacks Rank #2

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MAXIM INTG PDTS (MXIM): Free Stock Analysis Report

AGILENT TECH (A): Free Stock Analysis Report

PANDORA MEDIA (P): Free Stock Analysis Report

T-MOBILE US INC (TMUS): 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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