U.S. Markets open in 1 hr 47 mins

KEMET (KEM) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

KEMET KEM is set to report fourth-quarter fiscal 2019 results on May 16.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, delivering average positive surprise of 21.1%.

In the last reported quarter, revenues of $350 million lagged the Zacks Consensus Estimate of $352 million but increased 14.2% year over year.

Top-line growth was driven by higher demand for Multilayer Ceramic Capacitors (MLCCs) from automotive, telecom and industrial end markets, and favorable pricing.

These trends are expected to drive the top line in the soon-to-be-reported quarter. KEMET’s fourth-quarter fiscal 2019 results are expected to benefit from robust market demand for capacitors and its increased capacity to meet the demand.

The company is also expected to benefit from strong demand for large case MLCCs. Moreover, robust adoption of tantalum polymer products is a key catalyst.

Additionally, favorable product mix and a lean cost structure are expected to expand gross margin in the to-be-reported quarter.
 

Kemet Corporation Price and EPS Surprise

 

Kemet Corporation Price and EPS Surprise

Kemet Corporation price-eps-surprise | Kemet Corporation Quote

 

However, weakness in Asia due to the softness in China and the negative impact of tariffs due to the ongoing trade war between the United States and China are concerns. Moreover, excessive inventory with distributors is expected to hurt the top line.

For fourth-quarter fiscal 2019, KEMET expects sales to increase 8-8.5% year over year but decline 2.5-3% sequentially.

The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $340.4 million, which indicates growth of 7% from the figure reported in the year-ago quarter. Moreover, the consensus mark for earnings has been steady at 96 cents over the past 30 days.

What Our Model Says

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

KEMET 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 a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Verint Systems VRNT has an Earnings ESP of +2.94% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuit INTU has an Earnings ESP of +0.59% and a Zacks Rank #2.

Momo MOMO has an Earnings ESP of +1.21% and a Zacks Rank #2.

 

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Momo Inc. (MOMO) : Free Stock Analysis Report
 
Intuit Inc. (INTU) : Free Stock Analysis Report
 
Verint Systems Inc. (VRNT) : Free Stock Analysis Report
 
Kemet Corporation (KEM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research