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NXP Semiconductors (NXPI) Q1 Earnings: What's in Store?

NXP Semiconductors NV NXPI is set to report first-quarter 2016 results on Apr 25. Last quarter, the company posted a negative earnings surprise of 8.70%. Let us see how things are shaping up for this announcement.

Factors to Consider

NXP Semiconductors, a global semiconductor company, is known for its automotive and chip identification business and has seen massive growth in the portable device segment over the past year. The trend is expected to continue in the first quarter as well.

Continued strong adoption of tablets and smartphones, automotive electronics and the emergence of the new category of wearables boosted the demand for processing and sensing devices that run them. This should boost NXP Semiconductors’ first quarter revenues.

With the acquisition of Freescale Semiconductor, NXP Semiconductors has now become the world’s leading provider of automotive semiconductor solutions and general purpose microcontroller products.

Nonetheless, macroeconomic weakness, competition from Xilinx Inc. XLNX and Lattice Semiconductor Corp., consolidation in the telecom market, declining margins and volatility in the semiconductor market are likely to hurt results in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that NXP Semiconductors will beat 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: Earnings ESP for NXP Semiconductors is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 83 cents per share.

Zacks Rank: NXP Semiconductors has a Zacks Rank #3, which when combined with an ESP of 0.00%, 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

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

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

Barracuda Networks, Inc. CUDA, with an Earnings ESP of +200.00% and a Zacks Rank #1

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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
SILICON MOTION (SIMO): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
NXP SEMICONDUCT (NXPI): Free Stock Analysis Report
BARRACUDA NTWRK (CUDA): Free Stock Analysis Report
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