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Xilinx (XLNX) Q4 Earnings: Is the Stock Likely to Disappoint?

Xilinx Inc. XLNX is set to report fourth-quarter fiscal 2016 results on Apr 27. Last quarter, the company had posted in-line earnings. Let's see how things are shaping up for this announcement.

Factors to Consider

The California-based chipmaker reported modest results for the third quarter of fiscal 2016. However, year-over-year comparisons on both counts were unfavorable, primarily due to lower revenues from the Communications & Data Center division, and the Industrial, Aerospace & Defense end-markets. Nonetheless, the fiscal fourth-quarter revenue guidance is encouraging.

On the flip side, increasing demand for 28-nm nodes driven by higher wireless deployments and strength in the wired communication segment should remain the growth drivers. The company’s product launches are also expected to boost revenues. Additionally, we are encouraged by Xilinx’s endeavor to return shareholder value through regular share buybacks and dividend payouts.

However, a delay in China LTE deployments and higher spending on research and development, and selling, general and administrative activities could dent the company’s near-term results. Also, competition from the likes of Lattice Semiconductor Corporation LSCC remains a headwind.

Earnings Whispers

Our proven model does not conclusively show that Xilinx is likely to 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: The Earnings ESP for Xilinx is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 52 cents.

Zacks Rank: Xilinx carries a Zacks Rank #4. As it is, we caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement.

Stocks to Consider

Here are a couple of companies that you may want to consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corporation BYD with Earnings ESP of +36.0% and a Zacks Rank #1

Benefitfocus Inc. BNFT with Earnings ESP of +4.00% and a Zacks Rank #1

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BOYD GAMING CP (BYD): Free Stock Analysis Report
 
LATTICE SEMICON (LSCC): Free Stock Analysis Report
 
XILINX INC (XLNX): Free Stock Analysis Report
 
BENEFITFOCUS (BNFT): Free Stock Analysis Report
 
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