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Factors Likely to Decide Lattice's (LSCC) Fate in Q1 Earnings

Zacks Equity Research

Lattice Semiconductor Corporation LSCC is set to report first-quarter 2019 results on Apr 30.

The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters and matched the same once, with an average positive earnings surprise of 27.5%.

Past-Quarter Performance

In the last reported quarter, Lattice’s earnings of 8 cents per share came in line with the Zacks Consensus Estimate. Further, the figure was up by 7 cents from the year-ago quarter but down by 3 cents sequentially.

Net sales surged 0.7% year over year but declined 5.4% from the previous quarter to $95.98 million. Further, the figure came slightly ahead of the Zacks Consensus Estimate of $95 million.

Which Way Are Q1 Estimates Treading?

For the first quarter, Lattice anticipates revenues in the range of $94 million to $98 million. The Zacks Consensus Estimate for earnings is pegged at $96 million.

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

Lattice Semiconductor Corporation Price and EPS Surprise

 

Lattice Semiconductor Corporation Price and EPS Surprise | Lattice Semiconductor Corporation Quote

Factors to Consider

Lattice’s well diversified product portfolio continues to aid momentum across big OEMs worldwide and all the end markets. This is likely to contribute to the to-be-reported quarter.

Further, the company’s strong focus toward innovation of its solutions portfolio is likely to continue aiding its performance in the communications and computing market. Lattice is gaining traction among customers with its early access program for next-generation security solution. Moreover, its robust server and client security solutions are likely to positively impact the quarter under review.

Additionally, the company has started witnessing demand for 5G wireless infrastructure buildout which will impact the communications market in the quarter under review. Further, Lattice continues to benefit from the 4th Tectonic Shift in computing market with its low-power parallelizable architecture which is required in edge computing devices. The company is also witnessing rapid adoption of its programmable logic in edge computing space which is a positive.

In regard to the automotive market, the company is witnessing design wins in the fields of autonomous robots and motor control. Further, Lattice’s CrossLink solution which helps in video bridging for ADAS and infotainment systems is witnessing an improvement in its adoption rate. These are likely to aid revenue generation in the first quarter.

In consumer market, the company’s strong focus on shifting toward high margin areas of the market remains a tailwind.

All these endeavors are expected to aid Lattice’s top line in the to-be-reported quarter.

However, ongoing trade war between the United States and China remains a concern for semiconductor industry which does not bode well for the company. Further, this is resulting in macroeconomic uncertainty in the company’s end markets. These factors are likely to hinder the first-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 good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lattice currently has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes the surprise prediction difficult.

Other Stocks That Warrant a Look

Here are some stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Paycom Software, Inc. PAYC has an Earnings ESP of +3.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. SQ has an Earnings ESP of +5.5% and a Zacks Rank #2.

Acacia Communications, Inc. ACIA has an Earnings ESP of +5.73% and a Zacks Rank #2.

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