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Factors Setting the Tone for Himax (HIMX) in Q4 Earnings

Zacks Equity Research

Himax Technologies, Inc. HIMX is scheduled to report fourth-quarter fiscal 2018 results on Feb 19.

Notably, the company has a mixed surprise history in the trailing four quarters, recording average positive earnings surprise of 19.2%.

In the last reported quarter, Himax delivered non-IFRS earnings of approximately 3 cents per share, beating the Zacks Consensus Estimate by a penny.

Revenues declined 4.4% from the year-ago quarter to $188.4 million, and were almost in line with the Zacks Consensus Estimate of $188 million.




Notably, Himax stock has shed 50.2% in the past year, compared with industry’s rally of 12%.

Guidance & Estimates

For fourth-quarter fiscal 2018, management anticipates revenues to remain flat or increase 5% sequentially. The Zacks Consensus Estimate for revenues is pegged at $190.9 million, representing an increase of approximately 5.4% from the year-ago quarter.

Himax anticipates non-IFRS earnings to come in approximately in the range of 2-4 cents per dilute ADS. The Zacks Consensus Estimate for earnings has been stable ahead of fourth-quarter 2018 results and is currently pegged at 3 cents per share, representing year-over-year decline of 78.6%.

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

Factors Likely to Influence Q4 Results

Tainan, Taiwan-based, Himax Technologies is primarily a fabless semiconductor company that is engaged in providing display imaging processing technologies globally.

In the display driver IC market (“DDIC”), Himax is benefiting from strength in Touch and Display Driver Integration (TDDI) business due to higher ASPs and better margins.

In the fourth quarter, Himax expects sales from both discrete smartphone driver and TDDI from smartphone market to grow around 20% sequentially. In particular, management anticipates revenues from TDDI domain to double sequentially primarily due to ramping of additional capacity to address increased customer orders from new design-wins.

The growing clout of company’s LDDIC or large DDIC solutions, particularly among TV manufacturers developing high-end large panel display TV sets with 8K resolution is projected to aid financial performance in the to-be-reported quarter.

Notably, as smartphone market is transitioning to AMOLED and TDDI technologies, the company anticipates traditional DDIC business to decline almost 50% sequentially in the to-be-reported quarter. Moreover, soft demand for display driver in tablet market is a concern.

In non-driver product business, Himax is anticipated to benefit from capacity expansion and solid momentum in wafer-level optics (WLO) solutions.

Recent collaborations with MediaTek, Kneron, among others, with focus on 3D Sensing domain are anticipated to aid the company to expand business and in turn favor the top line. Notably, the company is striving to diversify 3D sensing end-market beyond smartphones to security solutions, among other emerging domains.

However, the adoption of finger print technology in Android smartphones which is priced lower than 3D sensing technology remains a woe. Further, competition from bellwethers including the likes of Novatek, Samsung SSNLF, among other players in the display driver IC market is a concern.

Himax Technologies, Inc. Price and EPS Surprise

 

Himax Technologies, Inc. Price and EPS Surprise | Himax Technologies, Inc. Quote

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.

Himax has a Zacks Rank #2 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.

Warrior Met Coal, Inc. HCC has an Earnings ESP of +4.97% and a Zacks Rank #1. The company is slated to report fourth-quarter 2018 earnings on Feb 21. You can see the complete list of today’s Zacks #1 Rank stocks here.

GTT Communications, Inc. GTT has an Earnings ESP of +173.53% and a Zacks Rank #2.The company is scheduled to report fourth-quarter 2018 earnings on Feb 28.

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