Electronics Stock Earnings Due on Feb 22: GRMN, MBLY & More
Zacks Equity Research
Updated
The earnings season is drawing to a close with 411 S&P companies having reported results till Feb 17. The earnings picture that has emerged so far has confirmed that the overall results for Oct–Dec 2016 are likely to be the best in about two years.
Total earnings for these companies are up 8% on 4.9% higher revenues, with 68.9% beating earnings estimates and 54.7% surpassing top-line expectations. Based on the pattern observed hitherto, the quarter is anticipated to register high single-digit percentage growth on a year-over-year basis.
Per the latest Earnings Preview, the October–December quarter’s overall earnings for the S&P 500 companies are expected to be up 7.4% year over year on 3.9% growth in revenues. This represents healthy improvement from the prior quarter that ended the five-quarter earnings recession for the benchmark index. The relative improvement in the quarterly performance is largely due to a turnaround in the economy, an improved job market scenario and rising oil prices. Experts widely believe that earnings growth is likely to be in double digits in 2017 and beyond.
As far as the technology sector is concerned, we have fourth-quarter results from 94.1% of the sector’s total market cap. Total earnings for these companies are up 8.7% year over year on 6.0% higher revenues. Beat ratios are impressive with 74.1% surpassing both earnings as well as revenue estimates.
Among the technology firms slated to report their quarterly earnings on Feb 22, let’s see what’s in store for these four electronic stocks:
Garmin Ltd. GRMN, an industrial growth company and leading provider of navigation, communication and information devices, is slated to report fourth-quarter 2016 results before the bell.
According to our model, a company needs the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase its odds of an earnings surprise.
Consequently, we do not expect Garmin to post an earnings beat since it carries a Zacks Rank #4 and has an Earnings ESP of 0.00%. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Notably, Garmin's results surpassed the Zacks Consensus Estimate in the preceding four quarters. It has an average earnings positive surprise of 35.69%. (Read More: What to Expect from Garmin this Earnings Season?)
Coming to share price movement, Garmin outperformed the Zacks categorized Electronics - Miscellaneous Products industry over the last one year. While the industry gained 23.74%, the stock gave a positive return of 23.99%.
Garmin Ltd. Price and EPS Surprise
Garmin Ltd. Price and EPS Surprise | Garmin Ltd. Quote
We don’t expect Mobileye N.V. MBLY, a developer of software and related technologies for camera-based advanced driver assistance systems, to post an earnings beat when it reports fourth-quarter 2016 results. This is because the company has a Zacks Rank #3 and an Earnings ESP of 0.00%.
We note that Mobileye N.V.’s results compared unfavorably with the Zacks Consensus Estimate last quarter, missing by 8.33%. However, over the past one year, shares of Mobileye outperformed the Zacks categorized Electronics - Miscellaneous Components industry. While the industry grew 34.68%, the stock returned 57.47%.
Mobileye N.V. Price and EPS Surprise
Mobileye N.V. Price and EPS Surprise | Mobileye N.V. Quote
Similarly, we don’t expect InvenSense, Inc. INVN, a leading provider of motion tracking devices, to outperform estimates when it reports third-quarter fiscal 2017 results. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
We note that InvenSense’s results compared unfavorably with the Zacks Consensus Estimate last quarter, missing by 60.00%. However, over the past one year, shares of InvenSense outperformed the Zacks categorized Electronics - Miscellaneous Components industry. While the industry grew 34.68%, the stock returned 61.74%.
InvenSense, Inc. Price and EPS Surprise
InvenSense, Inc. Price and EPS Surprise | InvenSense, Inc. Quote
We also don’t expect Fitbit Inc. FIT, a manufacturer of wearable fitness tracking devices, to beat on earnings when it reports fourth-quarter 2016 results. This is because the company has an Earnings ESP of 0.00% and a Zacks Rank #4.
However, Fitbit’soverseas growth and the rise in corporate wellness programs are expected to add users to its ecosystem and drive fourth-quarter results. (Read More: Can Fitbit Stock Surprise Investors Post Q4 Earnings?)
Notably, Fitbit’sresults compared favorably with the Zacks Consensus Estimate in all the last four quarters, with an average positive surprise of 78.30%. However, coming to the share price, Fitbit underperformed the Zacks categorized Electronics - Measuring Instruments industry over the last one year. While the industry gained 15.66%, the stock declined 63.92%.
Fitbit, Inc. Price and EPS Surprise
Fitbit, Inc. Price and EPS Surprise | Fitbit, Inc. Quote
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