Will Maxim Integrated (MXIM) Miss Q1 Earnings Estimates? - Analyst Blog

Maxim Integrated Products, Inc. ( MXIM ) is set to report first-quarter fiscal 2015 results on Oct 23. Last quarter, the company posted a negative earnings surprise of 10.42%. Let us see how things are shaping up for this announcement.

Factors to Consider this Past Quarter

Maxim reported disappointing fourth-quarter results with the top and bottom lines missing the Zacks Consensus Estimate. In the fourth quarter of fiscal 2014, earnings excluding special items of 43 cents per share missed the Zacks Consensus Estimate by 5 cents. Moreover, they were down 1.9% from the year-ago quarter. The decline was primarily due to lower revenues at the consumer, industrial and computing end markets.

Revenues came in at $642.5 million, up 6.1% sequentially and 5.6% on a year-over-year basis. The sequential increase in revenues was primarily attributable to growth across all its main businesses and, despite softness in the mobility business. However, revenues missed the Zacks Consensus Estimate of $650.0 million.

Diversification of the customer base to other OEMs including Chinese ones indicate healthy growth prospects for the company.

The company plans to combine simpler device design, higher performance, power and space efficiency in its different businesses including Automotive, Industrial, Communications and Datacenter. This integration will benefit the company with more secular growth in the analog industry.

With better inventory controls and stringent cost control methods, Maxim might see its margins improve. While Maxim's portfolio and pipeline remain solid and its end-market diversity commendable, its exposure to the consumer and computing markets increases risks.

For the first quarter of fiscal 2015, Maxim expects revenues in a range of $580-$620 million based on a quarter-end backlog of $377.0 million. Management's revenue guidance reflects a cautious outlook toward smartphone and tablet shipments at its largest customer. Moreover, shipments to other Mobility opportunities can be delayed.

Earnings Whispers?

Our proven model does not conclusively show that Maxim will beat earnings this quarter. That 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 37 cents. Hence, the difference is 0.00%.

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

Other Stocks to Consider

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

Facebook Inc. ( FB ) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).

Seagate Technology Public Limited Company ( STX ) has an Earnings ESP of +2.40% and a Zacks Rank #3 (Hold).

Mercadolibre, Inc. ( MELI ) has an Earnings ESP of +6.25% and a Zacks Rank #3.

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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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