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Can Automotive Strength & Acquisitions Aid AVX Q2 Earnings?

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AVX Corporation AVX is slated to report second-quarter fiscal 2019 results on Oct 24. In the last reported quarter, the company delivered a positive earnings surprise of 83.3%.

Notably, AVX has a mixed record of earning surprises in recent quarters. The company beat the Zacks Consensus Estimate twice in the trailing four quarters and matched it twice, delivering an average positive surprise of 26.39%.

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

Factors to Consider

AVX has been witnessing strong orders during the past several quarters. We expect the orders to remain strong in the to-be-reported quarter as well, due to strong demand of tantalum in both MnO2 and polymer. Also, the demand for its other interconnect solutions should remain strong in the quarter, aiding fiscal second-quarter results.

AVX has been investing in products in the automotive market, mainly because the electronic content in automobiles, particularly in the safety and infotainment areas, is on the rise.We expect the company to leverage its already-strong market position to drive deeper penetration, and possibly gain some share in the market. The strength in the auto sector should aid the company’s results in the quarter to be reported.

Moreover, the contribution from Kumatec buyout, which develops and manufactures automation equipment and plastic components, should aid AVX’s results in the to-be-reported quarter.

However, weakness in the smartphone market could impact its results in the fiscal second quarter. Slower rate of conversion to new models by consumers has been impacting the smartphone segment. Also, volatility in the PC market and increasing competition remain major concerns for the company.

AVX Corporation Price and EPS Surprise

 

AVX Corporation Price and EPS Surprise | AVX Corporation Quote

Earnings Whispers

Our proven model does not show that AVXis likely to beat estimates in the to-be-reported 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.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AVX’sZacks Rank #3 increases the predictive power of ESP. However, 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 witnessing negative estimate revisions.

Stocks to Consider

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

AMETEK AME has an Earnings ESP of +0.71% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies A has an Earnings ESP of +0.43% and holds a Zacks Rank #3.

Fortive Corporation FTV has an Earnings ESP of +0.86 and a Zacks Rank #3.

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