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Applied Materials (AMAT) Q4 Earnings: Surprise in Store?
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Applied Materials, Inc. (AMAT - Free Report) is set to report fiscal fourth-quarter 2016 results on Nov 17. Last quarter, it posted a positive surprise of 6.38%. Let’s see how things are shaping up for this announcement.
Factors at Play
The fiscal third quarter was mixed, wherein the bottom line came ahead of the Zacks Consensus Estimate but the top line fell short.
Applied Materials has a solid product line and management has stepped up investments to prepare for the ongoing transition to larger wafer sizes and smaller process nodes. The ramp up in FinFET, 3D NAND and new display technology will likely be the catalysts.
There is also scope for share gains on the Display side of the business backed by PVD tools. The drivers of this business are larger TV screens and better mobile displays that involve more complicated production processes and new tools.
Developing trends in mobility, connectivity, video and wearable devices are fueling growth in the industry. This, in turn, is expediting advancement in mobile processors, solid-state storage and interactive displays.
Applied Materials has strengthened its research & development and at the same time stepped up investment in product development.
The company has focused its structure and talent around key areas of value creation. It plans to align its product portfolio in a way that it generates the best returns for clients.
In its last earnings release, Applied Materials had guided well for the fourth quarter of fiscal 2016. Revenues are expected to increase 15–19 percentage points sequentially. Non-GAAP EPS is expected to come in a range of 61 cents to 69 cents.
Earnings Whispers?
Our proven model does not conclusively show that Applied Materials will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) 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 65 cents. Therefore, the Earnings ESP for the company is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Applied Materials carries a Zacks Rank #3 which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Kamada Ltd. with an Earnings ESP of +125.0% and a Zacks Rank #2.
Fortress Transportation and Infrastructure Investors LLC (FTAI - Free Report) with an Earnings ESP of +100.0% and a Zacks Rank #2.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
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Applied Materials (AMAT) Q4 Earnings: Surprise in Store?
Applied Materials, Inc. (AMAT - Free Report) is set to report fiscal fourth-quarter 2016 results on Nov 17. Last quarter, it posted a positive surprise of 6.38%. Let’s see how things are shaping up for this announcement.
Factors at Play
The fiscal third quarter was mixed, wherein the bottom line came ahead of the Zacks Consensus Estimate but the top line fell short.
Applied Materials has a solid product line and management has stepped up investments to prepare for the ongoing transition to larger wafer sizes and smaller process nodes. The ramp up in FinFET, 3D NAND and new display technology will likely be the catalysts.
There is also scope for share gains on the Display side of the business backed by PVD tools. The drivers of this business are larger TV screens and better mobile displays that involve more complicated production processes and new tools.
Developing trends in mobility, connectivity, video and wearable devices are fueling growth in the industry. This, in turn, is expediting advancement in mobile processors, solid-state storage and interactive displays.
Applied Materials has strengthened its research & development and at the same time stepped up investment in product development.
The company has focused its structure and talent around key areas of value creation. It plans to align its product portfolio in a way that it generates the best returns for clients.
In its last earnings release, Applied Materials had guided well for the fourth quarter of fiscal 2016. Revenues are expected to increase 15–19 percentage points sequentially. Non-GAAP EPS is expected to come in a range of 61 cents to 69 cents.
Earnings Whispers?
Our proven model does not conclusively show that Applied Materials will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) 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 65 cents. Therefore, the Earnings ESP for the company is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Applied Materials carries a Zacks Rank #3 which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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Stocks to Consider
You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:
vTv Therapeutics Inc. (VTVT - Free Report) with an Earnings ESP of +335.0% and a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.
Kamada Ltd. with an Earnings ESP of +125.0% and a Zacks Rank #2.
Fortress Transportation and Infrastructure Investors LLC (FTAI - Free Report) with an Earnings ESP of +100.0% and a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>