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Product Expansion to Aid Applied Materials (AMAT) Q3 Earnings

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Applied Materials, Inc. (AMAT - Free Report) is set to report fiscal third-quarter 2019 results on Aug 15. In the last reported quarter, it delivered a positive earnings surprise of 6.06%.

The company’s surprise history has been pretty impressive. It beat estimates in each of the trailing four quarters, with average of 3.27%.

Let’s see how things are shaping up for this announcement.

Strong Demand for Services

The company has been efficiently delivering key enabling technology to logic and foundry customers, given well-differentiated products along with high market share. Service is an important part of Applied Materials’ portfolio that grew significantly in the last reported quarter. These factors are likely to drive the upcoming results as well.

The Applied Global Services (AGS) segment is expected to perform well in the quarter to be reported, driven by improved device and yield performance.

The Zacks Consensus Estimate for AGS for the fiscal third quarter is pegged at $991 million. The same for Semiconductor Systems Group is pegged at $2.18 billion for the to-be-reported quarter.

Applied Materials, Inc. Price and EPS Surprise

 

Strength in Display to Drive Revenues

The Display segment is expected to be driven by significant opportunities, courtesy of investment in areas such as artificial intelligence, big data, cloud infrastructure, Internet of Things (IoT), virtual reality and smart vehicles.

The Zacks Consensus Estimate for the Display segment for the quarter to be reported is pegged at $335 million.

What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 or 5 (Sell rated) stocks are best avoided, especially if these have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Applied Materials currently has a Zacks Rank #3 and an Earnings ESP of -0.86%, making surprise prediction difficult.

Stocks to Consider

We see a likely earnings beat for each of the following companies in the upcoming releases.

CACI International, Inc. (CACI - Free Report) has an Earnings ESP of +4.02% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cisco Systems, Inc. (CSCO - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #3.

Ciena (CIEN - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #2.

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