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KLA-Tencor (KLAC) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research

KLA-Tencor Corporation KLAC is set to report fourth-quarter fiscal 2019 results on Aug 5.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with average of 9.23%.

KLA-Tencor delivered a positive earnings surprise of 10.43% in the last reported quarter. Fiscal third-quarter earnings of $1.80 per share surged 325% year over year.

Strong Product Portfolio — Key Catalyst

KLA-Tencor’s robust product portfolio has been catering to the increasing demand for wafer products, which is a positive for the to-be-reported quarter. The company is expected to witness improved end-market results, especially in China.

The addition of new capacity by wafer manufacturers bodes well for the quarter to be reported, given increasing demand for its new wafer products. KLA-Tencor’s efforts in bringing EUV lithography technology to the market via collaborating with every EUV customer are expected to aid the company in the fiscal fourth quarter.


KLA-Tencor Corporation Price and EPS Surprise


KLA-Tencor Corporation Price and EPS Surprise

KLA-Tencor Corporation price-eps-surprise | KLA-Tencor Corporation Quote


For the fiscal fourth quarter, the company expects revenues in the range of $1.21-$1.29 billion. Non-GAAP earnings are expected in the range of $1.55-$1.85 per share.

KLA-Tencor expects shipments within $1.235-$1.315 billion. Memory is expected to be approximately 47% of shipments in the fiscal fourth quarter. Foundry and Logic are expected to constitute around 41% and 12% of its total shipments, respectively, in the quarter.

Reduction in memory capacity investment due to weakness in mobile demand and a lull in data center might impact shipments. Additionally, weakness in China could be an overhang for the to-be-reported quarter.

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-Tencor has an Earnings ESP of 0.00%.

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

This combination makes surprise prediction difficult this earnings season.

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.

SeaWorld Entertainment SEAS has an Earnings ESP of +11.01% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cisco Systems Inc. CSCO has an Earnings ESP of +1.53% and a Zacks Rank #2.

Ciena CIEN has an Earnings ESP of +5.26% and a Zacks Rank #2.

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