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Tessera Technologies (TSRA) Q1 Earnings: What's in Store?

Tessera Technologies Inc. TSRA is set to report first quarter 2016 results on May 2. Last quarter, the company posted a 15.22% positive earnings surprise.

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

Factors at Play

Tessera posted encouraging fourth-quarter results with both the top- and the bottom line outperforming the respective Zacks Consensus Estimate.

As parts of its restructuring efforts, the company lowered operating expenses, increased technical collaboration, channelized investment toward potential growth areas and secured several patent licensing agreements and design wins. Cost savings from these restructuring efforts are a positive. A number of patent litigations have also been settled in favor of the company.

Also, Tessera continues to witness growth backed by its BA initiative and Greenfield activities. It continues to witness improvement in the FotoNation imaging group on the back of recent product additions. The recently acquired Iris biometric authentication technology is likely to boost growth.

These developments and Tessera’s premium imaging technology reflect that the business is poised for significant growth in the mobile and adjacent markets.

Also, Tessera’s leadership with FacePower continues and is now at a more general purpose object detection stage with the human body being the primary object of interest in cases where computer vision is used. The company’s ability to create a number of market leading solutions for video stabilization gives it an edge.

The Ziptronix acquisition was the highlight of the last quarter. It is intended to boost Tessera’s advanced packaging capabilities with the addition of low-temperature wafer bonding technology platform that will speed up the delivery of 2.5D and 3D-IC solutions to clients in the semiconductor industry.

Overall, the company’s internal R&D efforts, Invensas semiconductor packaging, new Ziptronix initiatives and FotoNation imaging technologies continue to make solid progress.

Earnings Whispers

Our proven model does not conclusively show that Tessera will beat estimates 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 are pegged at 39 cents. Therefore, its Earnings ESP is 0.00%.

Zacks Rank: Tessera’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

You may consider the following stocks, with a positive Earnings ESP and a favorable Zacks Rank:

Silicon Motion Technology Corp. SIMO with an Earnings ESP of +7.27% and Zacks Rank #1

Quotient Technology Inc. QUOT, with an Earnings ESP of +18.18% and a Zacks Rank #1

Arrow Electronics, Inc. ARW with an Earnings ESP of +1.42% and Zacks Rank #2

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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
 
TESSERA TEC INC (TSRA): Free Stock Analysis Report
 
SILICON MOTION (SIMO): Free Stock Analysis Report
 
ARROW ELECTRONI (ARW): Free Stock Analysis Report
 
QUOTIENT TECH (QUOT): Free Stock Analysis Report
 
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