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Synopsys (SNPS) to Report Q2 Earnings: What's in the Cards?

Synopsys Inc. SNPS is set to release third-quarter 2017 earnings on Aug 16. Notably, the company has positive record of earnings surprises in the trailing four quarters, with an average surprise of 21.9%.

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

Factors to Consider

Synopsys posted impressive second-quarter fiscal 2017 results. Revenues as well as earnings improved year over year, primarily owing to strength in hardware products.

The company is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries. We believe its recent product launches, acquisitions and deal wins will boost results, going ahead. Moreover, unique intellectual properties and global support provided by the company is likely to drive forthcoming results.

Additionally, the acquisition of Cigital and Codiscope will enable Synopsys to offer a comprehensive software security signoff solution to customers.

We are also encouraged by Synopsys’s endeavor to return shareholder value through continued share buybacks and dividends. These investor-friendly initiatives not only boost earnings but also inspire investor confidence and loyalty.

However, competition from Cadence Design Systems Inc. CDNS and Mentor Graphics Corp., a challenging technology spending environment and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.

Synopsys, Inc. Price and EPS Surprise


Earnings Whispers

Our proven model does not conclusively show that Synopsys is likely to 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: Synopsys’ ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 69 cents.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Synopsys carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.

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

Stocks to Consider

Here are some 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.

Broadcom Limited AVGO has an Earnings ESP of +2.57% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vishay Intertechnology VSH has an Earnings ESP of +2.78% and carries a Zacks Rank #2.

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Synopsys, Inc. (SNPS): Free Stock Analysis Report
Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report
Broadcom Limited (AVGO): Free Stock Analysis Report
Vishay Intertechnology, Inc. (VSH): Free Stock Analysis Report
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