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Can Synopsys (SNPS) Keep the Earnings Streak Alive in Q2?

We expect Synopsys Inc. SNPS to beat expectations when it reports fiscal second-quarter 2016 results on May 18.

Why a Likely Positive Surprise?

Our proven model shows that Synopsys is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate (50 cents) and the Zacks Consensus Estimate (47 cents), stands at +6.38%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #2 (Buy): Note that stocks with Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement. 

The combination of Synopsys’ Zacks Rank #2 and +6.38% ESP makes us very confident in looking for a positive earnings beat.

What is Driving the Better-Than-Expected Earnings?

Synopsys is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries. We believe the company’s recent product launches, acquisitions and deal wins will boost results, going ahead. Moreover, unique intellectual properties and global support provided by the company will likely drive its forthcoming results. Additionally, the company’s acquisition of Coverity will expand its reach in the software quality, testing and security tools market.

Moreover, it is noteworthy that Synopsys has surpassed the Zacks Consensus Estimate in three out of the trailing four quarters with an average positive surprise of 118%.

Other Stocks to Consider

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

TiVo Inc. TIVO, with an Earnings ESP of +25.00% and a Zacks Rank #1 (Strong Buy)

Agilent Technologies, Inc. A, with an Earnings ESP of +2.56% and a Zacks Rank #2

Intuit Inc. INTU, with an Earnings ESP of +0.66% and a Zacks Rank #2

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
TIVO INC (TIVO): Free Stock Analysis Report
 
INTUIT INC (INTU): Free Stock Analysis Report
 
SYNOPSYS INC (SNPS): Free Stock Analysis Report
 
AGILENT TECH (A): Free Stock Analysis Report
 
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