Will Advanced Micro (AMD) Disappoint This Earnings Season? - Analyst Blog
January 17 2014 - 9:50AM
Zacks
Advanced Micro Devices,
Inc. (AMD) is set to report fourth-quarter 2013 results on
Jan 21. Last quarter, it posted a 100% positive surprise. Let us
see how things are shaping up for this announcement.
Growth Factors this
Past Quarter
Advanced Micro’s third-quarter
earnings exceeded the Zacks Consensus Estimate of 2 cents owing to
solid execution and cost control management. Revenues were up 25.8%
sequentially and 15.1% year over year. It is the highest sequential
revenue growth rate in the past five years. The solid growth was
driven by a 109.7% jump in the Graphics and Visual Solutions
segment, primarily from the ramp up of semi-custom
System-on-Chips (SoCs).
However, gross margins of 35.7%
decreased sequentially but were up 480 basis points (bps) from the
year-ago quarter. The sequential decrease was due to unfavorable
mix and higher-than-expected operating expenses.
For the fourth quarter, AMD expects
fourth-quarter 2013 revenues to increase 5.0% (+/- 3.0%)
sequentially. Non-GAAP gross margin is expected to be 35%.
Operating expenses are expected to remain flat sequentially at
approximately $450.0 million.
Earnings
Whispers?
Our proven model does not
conclusively show that AMD will beat earnings this quarter. That is
because a stock needs to have both a positive Earnings ESPand a
Zacks Rank #1, 2 or 3 for this to happen. That is not the case here
as you will see below.
Zacks ESP:
The Most Accurate estimate stands at 5 cents while
the Zacks Consensus Estimate is higher at 6 cents. That is a
difference of -16.67%.
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
momentum.
Other Stocks to
Consider
You could consider other stocks
with a positive earnings ESP and Zacks Rank #1, 2 or 3 such as:
Bally Technologies,
Inc. (BYI), with Earnings ESP of +3.13% and a Zacks Rank
#1 (Strong Buy).
Western Digital
Corporation (WDC), with Earnings ESP of +0.48% and a Zacks
Rank #1.
Cirrus Logic Inc.
(CRUS), with Earnings ESP of +4.41% and a Zacks Rank #1.
ADV MICRO DEV (AMD): Free Stock Analysis Report
BALLY TECH INC (BYI): Free Stock Analysis Report
CIRRUS LOGIC (CRUS): Free Stock Analysis Report
WESTERN DIGITAL (WDC): Free Stock Analysis Report
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