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What's in Store for Rambus (RMBS) this Earnings Season?

Rambus Inc.RMBS is set to report fourth-quarter 2016 results on Jan 30. Last quarter, the company posted a positive earnings surprise of 20.0%. Moreover, Rambus has outperformed the Zacks Consensus Estimate in the four trailing quarters with an average positive earnings surprise of 21.33%.

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

Factors to Consider

We believe that Rambus is well poised to capitalize on the rising popularity of energy-efficient lighting, and LED products in the latest architectural, retail, commercial and residential lighting fixtures.

Notably, Rambus is going through a restructuring phase and we expect it to yield favourable results. Additionally, licensing agreements - the result of successful monetization of Rambus' patents - will continue to remain one of the major recurring revenue sources for the company, in our opinion.

Furthermore, the acquisitions of certain serial link assets of Semtech Corporation's SMTC Snowbush IP and Smart Card Software will enhance its product offerings, thereby boosting its top and bottom line performance in the to-be-reported quarter, in our view.

Nonetheless, competition from Semiconductor Manufacturing International Corp. and Advanced Micro Devices and customer concentration remain headwinds for the company.

Earnings Whispers

Our proven model does not conclusively show that Rambus will beat earnings 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. But 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 13 cents. Hence, the difference is 0.00%.You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Rambus carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

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

Rambus, Inc. Price and EPS Surprise

Rambus, Inc. Price and EPS Surprise | Rambus, Inc. Quote

Stocks to Consider

Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

CEVA Inc. CEVA , with an Earnings ESP of +9.52% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

AMETEK Inc. AME , with an Earnings ESP of +3.45% and a Zacks Rank #3.

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Rambus, Inc. (RMBS): 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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