Xilinx Inc. ( XLNX ) is set to report third-quarter fiscal 2015 results on Jan 21. Last quarter, the company posted a positive earnings surprise of 12.7%. Let us see how things are shaping up for this announcement.
Factors to Consider
Xilinx reported better-than-expected second-quarter results primarily backed by favorable product and customer mix. Going forward, the growing demand for 28-nanometer (nm) nodes due to higher wireless deployments and strength in the wired communication segment are expected to drive growth. Additionally, we believe that the company's continued focus on margin expansion, cost reduction across its product portfolio and higher yield are the positives. The company's product launches are also expected to boost revenues.
Nonetheless, delay in China LTE deployments and higher spending on research and development, and selling, general and administrative segments could impact the company's results in the near term. Also, stiff competition from Altera Corp. ( ALTR ) remains a headwind.
Our proven model does not conclusively show that Xilinx 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 60 cents. Hence, the difference is 0.00%.
Zacks Rank: Xilinx 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.
Stocks to Consider
Here are some 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 ), with an Earnings ESP of +12.12% and a Zacks Rank #1 (Strong Buy).
Apple Inc. ( AAPL ), with an Earnings ESP of +0.78% and a Zacks Rank #2 (Buy).
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