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Diodes (DIOD) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research

Diodes Incorporated DIOD is scheduled to report second-quarter 2019 results on Aug 5.

Notably, the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 8.3%.

Coming to price performance, Diodes stock has returned 32% year to date, outperforming industry’s rally of 22.2%.

Q1 at a Glance

Diodes had delivered non-GAAP earnings of 69 cents per share in first-quarter 2019, beating the Zacks Consensus Estimate by 13.1% and improved 43.8% year over year.

Revenues increased 10.1% from the year-ago quarter to $302.3 million, marginally ahead of the Zacks Consensus Estimate of $302 million.

What to Expect in Q2?

For second-quarter fiscal 2019, management anticipates revenues to come in around $322 million (+/-2%). The corresponding Zacks Consensus Estimate is pegged at $322 million, indicating an improvement of 5.9% from the year-ago quarter.

The Zacks Consensus Estimate for earnings has been stable ahead of second-quarter 2019 results and is currently pegged at 75 cents per share, suggesting growth of 29.3% from the year-ago reported figure.

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

Factors Likely to Influence Q2 Results

Plano, TX-based Diodes, a manufacturer and supplier of high-quality discrete and analog semiconductor products, is increasingly focusing on high-margin end-markets, primarily industrial, automotive and Pericom products.

Notably, revenues in automotive and industrial end markets surged 23% and 39%, respectively, on a year-over-year basis, in the last reported quarter. The momentum is expected to continue in the to-be-reported quarter.

Robust demand of USB Type C charging and packet switches, infotainment systems, other advanced driver-assistance systems (ADAS) solutions, Zener, Diodes bridges, and MOSFET design wins are anticipated to aid revenue growth in automotive domain. Management is optimistic on incremental adoption of PCI Express 4.0 clock buffers and clock generators.

Further, synergies from Diodes’ recently acquired Greenock, Scotland-based Wafer Fab facility from Texas Instruments — GFAB — is anticipated to help it in expanding presence in the automotive end-market and extend product offerings. This is expected to aid the upcoming quarterly results.

Growing penetration of the company’s proprietary super barrier rectifier (SBR) technology into various automotive applications is a tailwind. Notably, Diodes recently unveiled SBR8M100P5Q and SBR10M100P5Q automotive-compliant diodes based on SBR tech.

Further, strength in company’s latest PCI Express 2.0 low-power packet switch, DC fans, power protection and metering solutions, are aiding it to garner new design wins in industrial end-market, which in turn is likely to favor the second-quarter results.

Diodes is expected to expand its presence in consumer market with incremental adoption of SBR and Schottky products, sensors (with Hall Effect) in wireless Earbuds, and DC-DC solutions.

Diodes Incorporated Price and EPS Surprise

Diodes Incorporated Price and EPS Surprise
Diodes Incorporated Price and EPS Surprise

Diodes Incorporated price-eps-surprise | Diodes Incorporated Quote

We believe new deal wins and innovative product roll outs will boost overall results in the second quarter.

However, competition from the likes of Vishay Intertechnology Inc., and other semiconductor players is a concern. Moreover, Diodes’ exposure to Asian markets amid macroeconomic headwinds is likely to weigh on the to-be-reported quarter’s results.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Diodes has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks that Warrant a Look

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Clearway Energy CWEN has an Earnings ESP of +15.00% and a Zacks Rank #1. The company is slated to report second-quarter 2019 results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International Inc CACI has an Earnings ESP of +4.02% and a Zacks Rank #2. The company is set to report fourth-quarter fiscal 2019 results on Aug 14.

SeaWorld Entertainment SEAS has an Earnings ESP of +11.01% and a Zacks Rank #3. The company is slated to report second-quarter 2019 results on Aug 6.

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