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II-VI Incorporated IIVI is slated to report second-quarter fiscal 2021 (ended December 2020) results on Feb 9, before market open.
The company delivered better-than-expected results in three of the last four quarters, while meeting estimates in one. The company pulled off a trailing four-quarter earnings surprise of 79.34%, on average. Notably, its reported earnings of 84 cents in the prior quarter surpassed the Zacks Consensus Estimate of 55 cents by 52.73%.
In the past three months, shares of the company have increased 58.4% compared with the industry’s growth of 25.6%.
Factors at Play
II-VI is expected to have gained from the healthy demand for its products across key end markets in the fiscal second quarter. Further, strength across several end markets including datacom, telecom and wireless communications, along with 5G optical infrastructure buildout, is likely to have boosted the company’s revenues. Also, favorable trends across its life sciences, semiconductor capital equipment, and aerospace & defense end markets, backed by growth in bookings, are likely to have supported its revenues in the quarter.
Benefits from II-VI focus on greater operational efficacy are likely to have boosted its margins and profitability in the fiscal second quarter. In addition, the company’s solid sales channels, particularly in the transceiver market, are likely to have contributed to the quarterly performance.
Moreover, the company’s Finisar acquisition (September 2019), which has been boosting its growth opportunities in the optical communications space, is likely to have augmented its fiscal second-quarter revenues. In addition, II-VI is likely to have benefited from its solid backlog level in the fiscal second quarter, which was $899 million at the end of the previous quarter.
On the flip side, persistent weakness across the company’s automotive end market might have marred its performance. Also, it has been experiencing high costs and expenses over the past few quarters. This trend might have continued in the to-be-reported quarter and adversely impacted the company’s profitability and margin.
Amid this backdrop, the Zacks Consensus Estimate for its fiscal second-quarter revenues is currently pegged at $767 million, indicating growth of 5.4% from the quarter-ago reported number. The Zack Consensus Estimate for the company’s earnings is pegged at 90 cents per share, which indicates an increase of 7.1% from the previous quarter’s reported figure.
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
But that is not the case here as we will see below.
Earnings ESP: II-VI has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 90 cents.
IIVI Incorporated Price and EPS Surprise
IIVI Incorporated price-eps-surprise | IIVI Incorporated Quote
Zacks Rank: II-VI currently has a Zacks Rank #3.
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Axon Enterprise, Inc AXON has an Earnings ESP of +2.34% and it carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chart Industries, Inc. GTLS presently has a Zacks Rank #3 and an Earnings ESP of +0.49%.
The Middleby Corporation MIDD currently has a Zacks Rank #2 and an Earnings ESP of +8.67%.
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