Will Maxim (MXIM) Miss Earnings Estimates? - Analyst Blog
April 22 2014 - 5:55PM
Zacks
Maxim Integrated Products, Inc. (MXIM) is set
to report third-quarter fiscal 2014 results on Apr 24. Last
quarter, it posted a 10.0% negative surprise. Let’s see how things
are shaping up for this announcement.
Growth Factors This Past Quarter
Maxim posted mixed second quarter results with the bottom line
surpassing the Zacks Consensus Estimate while the top line missed
the same. The sequential revenue increase of 6.0% was primarily due
to the acquisition of Volterra. The acquisition helped the
company’s Computing business to contribute 17.0% of revenues
compared with 12.0% in the prior quarter.
Of late, Maxim has increased its focus on the faster-growing
consumer and computing end markets. Maxim has focused its efforts
on mid-range smartphones because the high end of the market is
seeing growth slow down. This seems like a good strategy
considering the fact that most of the future growth is likely to
come from emerging markets.
Furthermore, Maxim has been on the lookout to expand beyond
smartphones to game consoles, tablets and e-readers. All these
efforts are aimed at extending its foothold in various new
spheres.
For the third quarter, Maxim expects revenues in a range of
$590–$620 million. Backlog is expected to be $366.0 million. While
the GAAP gross margin is expected be in the 56%–58% range, GAAP
earnings are expected to be in the range of 37 cents – 41
cents.
Earnings Whispers?
Our proven model does not conclusively show that Maxim will beat
estimates 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 39 cents. Hence, the difference
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 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, which you may want to consider as
our model shows that they have the right combination of elements to
post an earnings beat this quarter:
Advanced Energy Industries, Inc. (AEIS), with
Earnings ESP of +10.00% and a Zacks Rank #1 (Strong Buy).
E-Commerce China Dangdang Inc. (DANG), with
Earnings ESP of +33.33% and a Zacks Rank #1.
ON Semiconductor Corp. (ONNN), with Earnings ESP
of +6.67% and a Zacks Rank #1.
ADV ENERGY INDS (AEIS): Free Stock Analysis Report
E-COMMRC CH-ADR (DANG): Free Stock Analysis Report
MAXIM INTG PDTS (MXIM): Free Stock Analysis Report
ON SEMICON CORP (ONNN): Free Stock Analysis Report
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