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KLA-Tencor (KLAC) to Post Q2 Earnings: What's in the Cards?

Zacks Equity Research

KLA-Tencor Corporation KLAC is set to report second-quarter fiscal 2019 results on Jan 29.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with average of 8.03%.

Moreover, KLA-Tenor delivered a positive earnings surprise of 11.82% in the last reported quarter. Earnings of $2.46 per share increased 36.7% from the year-ago quarter and 10.8% sequentially.

Revenues also increased 12.8% year over year to $1.09 billion, driven by rising demand for the company’s key products and strong shipments.

For second-quarter fiscal 2019, KLA-Tenor expects revenues between $1.03 billion and $1.11 billion. Non-GAAP earnings are expected in the range of $2.02-$2.34 per share.

Notably, the company’s shares have lost 19.7% in the past year compared with its industry’s decline of 26.2%.



Strong Product Portfolio — A Key Catalyst

KLA-Tenor’s robust product portfolio will continue to cater to the increasing demand for wafer products. Moreover, the company is expected to witness improved end-market results, especially in China.

Further, the addition of new capacity by wafer manufacturers bodes well, given increasing demand for its new wafer products. Additionally, the company’s strong efforts in bringing EUV lithography technology to the market via collaborating with every EUV customer remain a positive.

Shipment Forecast

Shipments in the fiscal first quarter of $1.01 billion were at the high end of the company’s guided range of $935 million to $1.015 billion, driven by strength in memory.

For second-quarter fiscal 2019, KLA-Tenor expects shipments within $985 million to $1.065 billion.

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.

Earnings ESP: KLA-Tenor has an Earnings ESP of 0.00%.

Zacks Rank: It currently carries a Zacks Rank #3.

Though a Zacks Rank #3 increases the predictive power of ESP, an ESP of 0.00% makes surprise prediction difficult. Hence, KLA-Tenor is unlikely to beat estimates this earnings season.

KLA-Tencor Corporation Price and EPS Surprise


KLA-Tencor Corporation Price and EPS Surprise | KLA-Tencor Corporation Quote

Stocks That Warrant a Look

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

Amazon.com Inc. AMZN has an Earnings ESP of +0.68% and carries a Zacks Rank #2.

Square SQ has an Earnings ESP of +6.60% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Waters Corporation WAT has an Earnings ESP of +2.45% and holds a Zacks Rank #3.

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