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What's in Store for Amkor Technology (AMKR) in Q1 Earnings?

Amkor Technology, Inc. AMKR is set to report first-quarter 2016 results on Apr 25. Last quarter, its earnings matched the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.

Factors at Play

Amkor’s fourth-quarter results were in line with management expectations driven by positive cash flows resulting from reduction in capital and operational budgets.

During 2015, Amkor made noticeable progress in some of its key areas.  The company’s System-in-Package (SiP) business grew significantly fetching revenues of $725 million. Automotive sales were up 10%. Furthermore, Greater China revenues grew 20%.

In December, Amkor completed the acquisition of J-Devices Corporation to strengthen its foothold in the automotive market. The acquisition made Amkor the world’s largest OSAT provider for automotive ICs.

Management expects the first quarter to remain sluggish as the high-end smartphone market remains weak. Despite challenging market conditions, management expects first-quarter revenues to grow 21% sequentially driven by additional revenue from J-Devices.

The company expects first-quarter revenues in the range of $785 million to $835 million, gross margin of 9% to 13% and net loss of $7 million to $37 million, or loss of 3 cents to 15 cents per share

Earnings Whispers?

Our proven model does not conclusively show that Amkor will 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. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 8 cents. Therefore, its Earnings ESP is 0.00%.

Zacks Rank: Amkor holds a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies that can be considered 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 Zacks Rank #1 (Strong Buy)

Himax Technologies, Inc. HIMX with an Earnings ESP of +16.67% and Zacks Rank #1

Time Warner Inc. TWX with an Earnings ESP of +3.13% and Zacks Rank #3

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TIME WARNER INC (TWX): Free Stock Analysis Report
 
SILICON MOTION (SIMO): Free Stock Analysis Report
 
HIMAX TECH-ADR (HIMX): Free Stock Analysis Report
 
AMKOR TECH INC (AMKR): Free Stock Analysis Report
 
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