Will PMC-Sierra (PMCS) Disappoint This Earnings? - Analyst Blog
January 28 2014 - 12:50PM
Zacks
PMC-Sierra Inc.
(PMCS) is set to report fourth-quarter 2013 results on Jan 30. Last
quarter, it posted a 14.3% negative surprise. Let’s see how things
are shaping up for this announcement.
Growth Factors this
Past Quarter
PMC-Sierra’s third-quarter earnings
missed the Zacks Consensus Estimate by a penny due to challenging
macro environment and slower-than-expected carrier spending,
partially offset by solid expense management. However, revenues
were up sequentially due to strength in the Storage and Mobile
market segments, partially offset by weakness in the Optical
segment.
Gross margins expanded in the
quarter, driven by higher revenues and a favorable product mix.
For the fourth quarter, PMC-Sierra
expects revenues to be flat to down 8% or down 4% at the mid-point.
Additionally, the carrier business is expected to be down slightly,
due to slower-than-expected carrier spending.
Earnings
Whispers?
Our proven model does not
conclusively show that PMC-Sierra will beat earnings 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. This is not the
case here as you will see below.
Zacks ESP:
Both the Most Accurate estimate and the Zacks
Consensus Estimate stand at 5 cents. Hence, the difference is
0.00%.
Zacks Rank #3
(Hold): PMC-Sierra’s Zacks Rank when combined with a 0.00%
ESP makes surprise prediction difficult.
We caution against stocks with a
Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings
announcement, especially when the company is seeing negative
estimate revisions momentum.
Other Stocks to
Consider
Here are some other companies you
may want to consider as our model shows they have the right
combination of elements to post an earnings beat:
Melco Crown Entertainment
Limited (MPEL), with Earnings ESP of +2.50% and a Zacks
Rank #1 (Strong Buy).
Waddell & Reed
Financial, Inc. (WDR), with Earnings ESP of +2.44% and a
Zacks Rank #1.
TransDigm Group
Incorporated (TDG), with Earnings ESP of +6.25% and a
Zacks Rank #1.
MELCO CROWN ENT (MPEL): Free Stock Analysis Report
PMC-SIERRA INC (PMCS): Free Stock Analysis Report
TRANSDIGM GROUP (TDG): Free Stock Analysis Report
WADDELL&REED -A (WDR): Free Stock Analysis Report
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