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Diodes (DIOD) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

Diodes Incorporated DIOD is scheduled to report fourth-quarter 2019 results on Feb 11.

For the quarter, the company expects revenues to be approximately $300 million, plus or minus 2%. 

The Zacks Consensus Estimate for revenues is also pegged at $300 million, indicating a decline of 4.6% from the figure reported in the year-ago quarter.

The consensus mark for fourth-quarter earnings has been steady at 63 cents per share over the past 30 days. However, the estimate indicates a year-over-year decline of 3%.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with positive earnings surprise of 6.12% on average.

Let’s see how things have shaped up for this announcement.

Diodes Incorporated Price and EPS Surprise

Diodes Incorporated Price and EPS Surprise

Diodes Incorporated price-eps-surprise | Diodes Incorporated Quote

Factors to Consider

Diodes’ strong portfolio of products has well positioned it to capitalize on high-growth areas like connected cars, high-end servers and storage, 5G, and IoT. This is expected to have contributed to the company’s growth in the fourth quarter.

The company’s automotive products like LED drivers, TVS, Zener Diodes, bipolar junction transistors, SBR and XRQ family of crystals have been gaining traction in the market. Moreover, Diodes is well positioned to address the growing demand for PCI Express interface with offerings like the PCI Express 4.0 clock generator and clock buffers with AECQ grade two 105C ambient temperature support. This is likely to have driven automotive revenues in the to-be-reported quarter.

Diodes’ industrial segment revenues are expected to have benefited from strong design wins across like applications like metering, DC fence, power tools and power supply, as well as the strong adoption of USB Type-C in medical equipment.

Additionally, robust adoption of high-speed interfaces in the IoT industry generated demand for ESC protection devices, which, in turn is expected to have driven Diodes’ top-line growth. Notably, the company secured multiple design wins for ESC protection devices in the third quarter and this trend is expected to have continued in the fourth quarter.

In the communications segment, high demand for Diodes’ products for use in 5G applications like CPE, small cell, base station, as well as the growing adoption of Type-C products for mobile phone applications is likely to have driven growth.

In the computing market, the growing adoption of USB Type-C in notebook and PC applications is expected to have driven revenues in the fourth quarter.

However, Diodes’ exposure to Asian markets amid macroeconomic headwinds is likely to have weighed on the to-be-reported quarter’s results.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Diodes has a Zacks Rank #3 and 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.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Applied Materials, Inc. AMAT has an Earnings ESP of +2.89% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alteryx, Inc. AYX has an Earnings ESP of +6.49% and a Zacks Rank #1.

CEVA, Inc. CEVA has an Earnings ESP of +27.06% and a Zack Rank #1.

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